“That’s kind of naïve that you think that the emergency declaration would allow for the use of the Fund assets for non-retirement purposes. That’s kind of absurd. We don’t go that far,” Inos told Saipan Tribune and KSPN 2 in an interview on Capital Hill yesterday morning.
Fund administrator Richard Villagomez asked House and Senate members in a June 22 letter to reject the Fund emergency declaration or at least address seven of their specific concerns.
These include clarifying that trust assets will be kept separate from assets of the CNMI government or its agencies and ensure at least $13 million annually in employer contribution.
“We disagree. In fact, we plan to do better than that. We plan to infuse about $30 million, not $13 million a year,” Inos said, adding that this will double the Fund’s lifespan, beyond 2014.
Inos said he hopes the Legislature will fully understand the executive order.
“We’ve never taken the position that’s taken by the Fund.We do not plan to use any of the Fund assets for anything than for the purposes of the Fund; that we allow $13 million of employer contribution into the Fund. We’re trying to do better than that,” Inos added.
Villagomez met yesterday with a few Senate and House members to reiterate the Fund’s concerns.
Senate President Paul Manglona (Ind-Rota) said he hopes all Senate and House members will be present in a follow-up meeting with Fund officials today.
“Based on yesterday’s meeting, some lawmakers are now leaning toward amending the executive order to address the Fund’s concerns. We hope that in the Wednesday meeting, we would be able to get consensus on what to do with the Fund request,” Manglona said.
Rep. Ray Tebuteb (R-Saipan) separately said he supports amending the Fund EO to address the “seven concerns of the Fund.”
“But I don’t support rejecting the EO,” he added.
Rep. Joseph Palacios (R-Saipan) said when the Fund filed for bankruptcy, “they didn’t even have the decency to come to us and tell us they were going to do that. We thought we’re supposed to be working together at the time.”
“Now that they want something, they’re coming to us. Had they talked to us before, maybe we won’t be talking about this emergency declaration today. I think the administration’s plan is good, and the Fund made a bad decision [in filing for bankruptcy],” he said.
Rep. Ralph Demapan (Cov-Saipan), for his part, said that because the EO has not come into effect yet, the administration could still amend it instead of the Legislature amending it.
“But most important, I would like to see the Retirement Fund and the administration sitting down together to build that bridge, to work together,” he added.
In his personal view, Inos believes “there are few folks out there [with the Fund] who are just concerned about their existence and they want to protect their jobs. .They shouldn’t be worried about that.”
The administration will be moving the Fund under the Department of Finance.
As it is now, the Fund is not a sustainable program, Inos said, adding the administration and the Fund should now be preparing for the transition.
“They come out with things like this.this is not conducive to working together,” Inos said, referring to Villagomez’s letter to the Legislature.
Inos, a former Finance secretary, said the administration’s advice is for the Fund not to appeal the federal court’s decision to dismiss the pension agency’s Chapter 11 bankruptcy petition.
“We need to be on board, on an overall plan, and that overall plan is to try to salvage whatever we can of the DB [defined benefit] plan, and that is to find ways to make sure that those who have retired under the program will continue to receive their pension and that’s what we’re trying to address. And then back to the administration plan of converting or transitioning active folks who have not retired from the DB to transition onto [U.S.] Social Security,” he said.
The Fitial administration is now drafting legislation it hopes the Legislature will pass, to be given to the U.S. Social Security Administration. That legislation expresses the CNMI’s desire to enter into the U.S. retirement system.