Fund asks court for temporary reduction in members’ benefits

To save the retirees’ pension program from collapse, the NMI Retirement Fund has asked the Superior Court to order a temporary cut in the benefits paid to retirees as an immediate way to restructure the Fund’s liabilities.

The Fund wants the benefit cuts to take effect by Jan. 1, 2012.

The Fund also asked Associate Judge Kenneth Govendo to reconsider a June 29 ruling that mandated the agency to set aside $100 million as a reserve fund for active government employees and retirees who have yet to collect their pension benefits.

These requests, filed Friday by Fund legal counsel Viola Alepuyo and Braddock J. Huesman, also asked the court to allow the immediate turnover of Marianas House in Washington, D.C. to the Fund as partial satisfaction of a court judgment. Govendo, at the last hearing, had deferred awarding the property to the Fund.

Last Friday, the Fund had also asked the court to appoint board of trustees chair Sixto Igisomar as attorney-in-fact for the CNMI with full and irrevocable power and authority to transfer ownership of the Marianas House to the Fund, which plans to sell the property so proceeds of the sale will offset and reduce the judgment.

The court had determined in June 2009 that the central government owes the Fund over $231 million in unpaid employer contribution. That amount has gone up since then.

According to the Fund yesterday, there is no law in the CNMI that allows the board of trustees to unilaterally restructure benefit payments to retirees. In order to restructure the Fund’s liabilities, the court is being asked to use its “equitable powers” in order to restructure the Fund’s liabilities by temporarily reducing benefits to members.

In Friday’s filing, the Fund also asked the court to order the Fund, the CNMI government, and the Commonwealth Retirees Association to participate in a court-supervised mediation to come up with an equitable agreement on the restructuring of the Fund’s liabilities.

“The Fund is hoping the court will issue an order that will allow the Fund to implement some type of restructuring of liabilities no later than Jan. 1, 2012,” the Fund’s statement said.

The Fund encourages those in support of its motion to make that support known to the court and to the Legislature. It invites them to a hearing on the motion on Sept. 29 at 1:30pm in courtroom 205A before Govendo. The hearing is open to the public.

Last week, Fund’s investment consultant Wilshire Associates disclosed that the plan’s current portfolio—valued at just over $300 million—will only allow three years of existence for the pension program.