Fund’s crisis management plan underway

The NMI Retirement Fund board of trustees urged administrator Richard Villagomez on Thursday to expedite the completion of a crisis management plan that will provide a detailed preparation on how the agency can survive during the expected worst state of the pension program.

The board also deferred action on the proposed closure of its Tinian and Rota offices pending the completion of the crisis management plan, which is being planned for enforcement by the next fiscal year.

In view of a new court order that mandates the Fund to reserve $100 million for its pensioners, board vice chair Jerry Crisostomo said it is imperative to come up with a plan that will guide the agency in its operation next fiscal year.

Crisostomo recommended that the board revisit the agency’s budget for 2012, and evaluate the areas and programs that need to be cut, reduced, or streamlined.

“We are in a very serious fiscal situation and we need to come up with a plan for fiscal year 2012,” he told the board, urging the completion of either a 90-day or 180-day contingency plan for the Fund.

The new fiscal year starts on Oct. 1, 2011.

Crisostomo said the overall picture shows a bleak future for the pension program due to its declining investment portfolio.

The Fund has been drawing on its investments to cover the shortfall of the central government, which has failed to remit employer contributions to the Fund for several years. The Fund withdraws approximately $50 to $75 million from its investment every year. As of June 30, 2011, the Fund reportedly had only $311 million in its portfolio.

Crisostomo also instructed Villagomez to study the possibility of privatizing some of the Fund’s services and programs. Personnel restructuring, hiring, and replacement of positions must also be seriously assessed to come up with a contingency plan for the Fund, he added.

The board disclosed that it was during a meeting on Rota when they discussed the closure of the Rota and Tinian offices as a way to reduce the agency’s operating expenditure.

Trustee Bernadita Palacios recommended suspending action on the shutdown plan until next fiscal year. The board agreed but approved the temporary relocation of its Rota office to save money for the meantime.

Villagomez said the relocation is only for a short period, until the board makes a permanent decision on the matter.