No funds yet for ’05 COLA

The NMI Retirement Fund board has decided to withhold the release of a 2.7-percent cost of living allowance for retirees this year due to the lack of remittances from the central government.

“The board has made a decision that we would only give it [COLA] when there’s funding from the government for such purpose. We can’t shoulder it ourselves,” said Fund administrator Karl T. Reyes.

This came even as the Fund approved to raise the COLA to 2.7 percent this year, which translates to about $863,000 for 2005. The previous year’s COLA was at 2 percent. The allowance is incorporated in the retirees’ pension every 15 days.

The COLA increase is supposed to take effect by January of each year.

The Fund earlier hoped to receive the funding by end of April but no such money was turned in by the central government.

Reyes said that the retirees’ COLA funding has actually not been coming in since 1998.

“Over the years, it’s the Fund that’s providing for COLA, but not anymore,” said Reyes.

He cited that Public Law 8-31 mandates the release of $2 million a year for three items: retirees’ COLA, special annuity for the past governor and lieutenant governor, and life and health insurance programs.

“Unfortunately, the last time that the Fund received the $2 million was in 1998,” said Reyes.

The law was passed in 1994.

He said that the $2 million appropriation is in fact very small, given the increase in the number of retirees now.

In 1994, there were probably 300 retirees, he said. This number has grown to some 2,000 now.

For health expenses, Reyes said that the average billing amounts to $120,000 every two weeks or about $3.1 million a year.

Special annuities for past governors and lieutenant governors total some $80,000 a year.

The Department of Finance recently acknowledged that it is faced with a $113-million liability, including a $79.1 million debt in employer contribution to the Fund and another $12.6 million under P.L. 8-31.

The Finance Department said that current outstanding balances include: $19 million for FY 2002; $23.4 million for FY 2003; $24.5 million for FY 2004; and $12.2 million so far for FY 2005.

The government’s supposed annual contribution to the Fund totals $24.4 million or $39.6 million, including autonomous agencies. Since the government does not have the funds to pay off the total required amount, it has agreed to at least pay $815,000 per pay period. Previously, Reyes said, the government’s remittance was a little over $500,000.

The government shoulders 24 percent in employer contribution. There are some 5,000 active members of the Retirement Fund.