TO AVOID $2.5M SHORTFALL
Rep. Mario Taitano (Ind-Saipan) prefiled yesterday a bill amending the retirement contribution formula for autonomous agencies and the central government to prevent the Settlement Fund from sustaining a shortfall of some $2.5 million annually that could result in asset depletion by 2019.
In his House Bill 18-184, Taitano said the Finance secretary has failed to adjust the contribution formula required by Public Law 17-82.
That law allowed active members to withdraw Retirement Fund contributions and required Finance to determine the central government and autonomous agencies’ contribution rates to the Retirement Fund.
“This bill adopts the percentage of liability for each autonomous agency of the annual cost of paying retirement benefits and provides for adjustment of the percentage by the Secretary of Finance,” said Taitano, chairman of the House Committee on Retirement Issues. His bill seeks to change Section 203 of PL 17-82 as amended by PL 18-2.
The bill requires the government to make contributions to the “Settlement Fund established by the Settlement Agreement in Johnson v. Inos” each year.
It says the amount of contribution required by each autonomous agency for Class I and Class II members shall be equal to the sum of normal cost of providing “75 percent” of the payments to the beneficiaries and the expense of administering the Settlement Fund for the next fiscal year.
This will be determined by the Finance secretary, in consultation with the Settlement Fund trustee, multiplied by the following percentages:
Public School System, 22.50 percent; Board of Education, 0.10 percent; Commonwealth Development Authority, 0.60 percent; Commonwealth Healthcare Corp., 17.15 percent; Commonwealth Ports Authority, 6 percent; Commonwealth Utilities Corp., 8.7 percent; Northern Marianas College, 3.9 percent; Northern Marianas Housing Corp., 0.90 percent; NMI Retirement Fund, 1.10 percent; Office of the Public Auditor, 1.40 percent; Public Utilities Commission, 0.04 percent; and Tinian Municipal Agencies of Local Government, 2.60 percent.
Taitano, in his bill, said the Finance secretary may adjust these percentages, pursuant to autonomous agencies’ request supported by an actuarial analysis showing that the liability for retirement benefits is lower than the percentage indicated.
The bill also says autonomous agencies remain liable for the 25 percent of contributions necessary to fund the deferred pension payments.
“In the event that the Commonwealth government funds the restoration of the 25 percent deferred pension payments for all retirees, the autonomous agencies shall reimburse the Commonwealth government in the percentages set forth…” the bill adds.
As of yesterday, there’s no telling when the next House session would be, so that Taitano can formally introduce his new bill.