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Fund taps into ‘emergency funds’
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Posted on Apr 26 2006
In the face of the central government’s serious cash flow, the NMI Retirement Fund board will be tapping its “ultra short fund” or emergency fund to pay off its pension obligations this week.
Fund administrator Karl T. Reyes said yesterday that the board approved during a special meeting Tuesday to get $1.9 million from the special fund to pay retirees, group health insurance, and vendors.
“We have to identify something to pay the retirees and give out refunds. We requested the board to authorize the use of the fund, which is reserved strictly for emergency cases,” said Reyes.
He said the fund is deposited at the Bank of Hawaii. The total reserved amount in the “ultra short fund” is less than $6 million.
The Fund is obliged to pay off retirees’ pension on or before Friday this week.
Reyes said that, under the rules, the money could be tapped no later than three working days prior to actual use.
He said the central government might not be able to remit its employer’s contribution once again this week.
He said the Fund has received $1.6 million from other government agencies but not from the central government.
The Fitial administration first failed to meet its retirement obligation two weeks ago. At that time, the Fund said that it tapped its local investments money to pay the pension obligations.
The central government is supposed to remit $1.3 million to the Fund per pay period. The Fund, however, has only been getting less than $1 million from the Department of Finance.
From early January until two weeks ago, the administration was paying the Fund $900,000 bi-weekly.
This developed as finance and budget officials are looking at delaying the government’s retirement contribution as an option to survive the current fiscal crisis.
Other alternatives are to cut the government employees’ salaries by 10 percent and reduce tax rebates and refunds.
Right now, the central government faces an outstanding debt of some $85 million in unpaid employer contribution.
