Govt assures retirees of secure pension funds

Officials assured yesterday the government retirees of secure income, saying that they would ensure that the NMI Retirement Fund program remains stable.

Gov. Juan N. Babauta, in his remarks during the Fund’s 25th anniversary yesterday, said that the agency right now “is in the best shape ever.”

He cited that the Fund under a previous board of trustees had suffered a $125 million to $130 million loss in the stock market.

Under the present board, he said, the Fund’s total investments rose to $445.3 million.

“It’s the best ever for this program,” he said.

The present board, he said, worked under very difficult circumstances but it pulled through.

“I’m very optimistic of the health and longevity of this program. I’ll keep making sure that it remains healthy,” said Babauta.

The governor said that the government is paying some $17 million a year into the Fund. Before this board, the figure only involved $10 million a year, he said.

Fund board chair Joseph Reyes told the audience of about 50 people, composed of retirees and guests, that retirees’ funds are secure.

“The Retirement Fund program is your income security. We’re working very hard every day to manage it well,” he said.

Fund administrator Karl T. Reyes said the Fund consists of “very hardworking, educated, and dedicated staff.”

The NMI Retirement Fund, founded in October 1980, currently provides services to 7,581 members, including 5,000 active government employees.

The Fund said its total assets stand at $534 million, which includes both local and international investments.

It’s unfunded liability, however, is also up at $526 million.

Administrator Reyes said this amount includes the $300 million liability ever since the Fund was created.

“When it started, it already had $300 million unfunded liability. At that time, they [government] started giving credits to people who didn’t really contribute a penny to the Fund. It’s part of the agreement with the federal government,” said Reyes.

He said the unfunded liability also includes the $80 million government arrears in employer’s contribution.

Authorities said that government payments to the Fund were current until June 1998 and that payments ceased altogether from August 1998 to October 2001. From October 2001 to September 2005, government payments to the Fund totaled $56.3 million.

The Fund is mandated to have at least $1 billion in total assets by 2020.

The Fund said it managed to raise its total investments from $3 million to $445.3 million in a 25-year span.

It said that as part of its investment strategy, it currently allocates some 4.4 percent or nearly $20 million in the local market, including housing loans to its members.

The Retirement Fund also administers the Workers’ Compensation Commission and the Government Group Health and Life Insurance trust Fund. These programs were created to provide protection for employees in the CNMI from potentially devastating financial impact of injury or illness.