Fund opposes exempting PSS from rate hike
The NMI Retirement Fund is opposing the passage of a bill that aims to exempt the Public School System from the rate increase in retirement contribution beginning fiscal year 2006.
“We don’t favor that. I don’t think the Senate will pass it if they look at it more closely. We only have one system of retirement here. If you give one agency such an exemption, all others will follow suit, and what happens to the Retirement Fund? It will suffer,” said Fund administrator Karl T. Reyes.
He noted that the House of Representatives passed the measure, House Bill 14-369, without consulting with the Fund.
“It’s the Senate that’s asking us to provide a written statement,” said Reyes.
The bill, introduced by Rep. David M. Apatang, aims to exempt PSS from paying the additional rate—from 24 percent to 36.7 percent—in employer contribution effective Oct. 1, 2005.
This developed after the Fund denied PSS’ request to be exempted from the rate, saying it is necessary for the survival of the Fund.
PSS earlier said it should not be “penalized” for the additional rate because it has been paying its obligations to the Fund on time, unlike the central government.
“Since PSS has always paid its employer’s share of retirement and insurance, it is neither reasonable, nor fair to require PSS to pay a higher rate. This higher rate penalizes PSS when, instead, we should be rewarded for being faithful in paying the employer’s share. …We lived within our means and paid our bills. Now, we are being required to help pay off a debt that we had no hand in creating,” said Education Commissioner Rita H. Inos and board of education chair Roman Benavente in a statement.
The PSS officials also said that it would negatively affect PSS funding for certain programs.
Reyes, meantime, said that, while the PSS’ sentiment is understandable given its difficult financial condition, the Fund cannot discriminate in its imposition of the rate changes.
Reyes said that the Fund should have actually raised it to 39.4 percent beginning FY 2003 as recommended in a latest actuarial study “but the board suspended such implementation because of budgetary constraints.”
He said that the Fund is mandated by law to seek an annual independent actuarial valuation to determine the appropriate rate to protect the integrity of the agency.
Apatang’s bill aims to exempt PSS from the rate increase for the next five years.
The Fund said earlier that the rate increase was triggered by the failure of the central government—Executive Branch, Legislature, Judicial Branch—to pay its employer contribution, now totaling over $80 million.