‘Let immigration officers withdraw contributions’

CNMI immigration officers who will lose their jobs due to “federalization” should be allowed to withdraw their pension contributions regardless of eligibility, according to the Senate Committee on Fiscal Affairs.

The Division of Immigration employs 65 officers. Most of these employees have retirement benefits that have accrued in the defined benefit plan, the Senate committee said in a report.

Currently, only government employees who have been paying to the defined benefit plan for 15 years or less can withdraw their contributions.

The committee said this option should be extended to all CNMI Division of Immigration employees who will be displaced by the new immigration system and who cannot be assigned to another position in the CNMI government.

While the new immigration law grants hiring preference to the current immigration officers, it does not guarantee they will have jobs under the federalized system. The U.S. government will assume control of CNMI immigration on June 1, 2009.

The early pension withdrawal started as an option available only to employees with 10 years of government service. Last year, it was expanded to include employees with up to 15 years of contributions. This resulted in a rash of refund requests, the NMI Retirement Fund has reported.

According to Fund administrator Mark Aguon, since the law was enacted last year, contribution withdrawals had averaged $500,000 a month. The Fund is unsure whether this is good or bad for the pension program.

Aguon has said it is likely to benefit the pension program in the long term. The more people taking out their contributions, the fewer future retirees will there be. That means the pension agency will have less liability to fund.

But more withdrawals also mean the retirement program will have to dispense more money than it normally does. Since no government contributions are going into the Fund, the short-term impact can be damaging to the pension plan.

As of March 2008, the Fund had $440 million in assets. This year, the Fund is expected to liquidate $45 million in assets to pay benefits and administrative costs. If drawdowns continue at this rate and the government continues to fail to remit any money to the Fund, the pension program will be bankrupt in fewer than 10 years.