Judge: It’s a miracle we’ve survived this far
Gov. Ralph DLG Torres appeared in court yesterday to personally assure the CNMI’s retirees that, even if the CNMI is going through financially difficult times, his priority is to ensure that retirees not only get paid 75% of their pension benefits, as required in the Betty Johnson’s class action settlement, but also the remaining 25%.
While the CNMI government is not required to pay the 25% benefit payments under the Johnson settlement deal, it has voluntarily made payments to the retirees.
As of Sept. 15, 2019, there are 2,904 settlement class members or retirees. The membership decreased by 55 members from fiscal year 2017, according to the NMI Settlement Fund.
Torres told U.S. District Court for the NMI designated Judge Frances Tydingco-Gatewood that despite the challenges the CNMI is facing after Super Typhoon Yutu’s devastation in October 2018, he and Lt. Gov. Arnold I. Palacios, along with the Legislature, are committed to pay the retirees 100% of their pension benefits.
Tydingco-Gatewood invited Torres and Palacios to appear at yesterday’s hearing pertaining to the status of the NMI Settlement Fund.
The governor said they go over their financial status every day and that the retirees are their No. 1 priority.
Torres thanked the government’s vendors, who are being patient in waiting to get paid.
Torres said he and Palacios are open to options in order for the NMI Settlement Fund to be sustainable.
Tydingco-Gatewood herself said that, considering the destruction wrought by Yutu, she is surprised that Torres and his administration are still able to continue their commitment to pay 100% in pension benefits.
“It’s almost impossible,” Tydingco-Gatewood said.
The judge said it’s a big decision for the administration and the Legislature to make the Settlement Fund sustainable.
According to NMI Settlement Fund trustee Joyce C. H. Tang, in order for the Fund to be sustainable by 2024, the CNMI government would need to make a lump sum payment of $477.2 million to the Fund today.
Tydingco-Gatewood recalled that the status of the Retirement Fund was scary and devastating to the retirees six years ago. “It’s a miracle we’ve survive this far,” she added.
She credited the Fund’s continued survival to Tang, Settlement Fund trustee and counsel for Betty Johnson, while stating that the success of the Settlement Fund would not have happened if not for the commitment of the CNMI government.
“It’s remarkable,” the judge said.
At the end of the hearing, Tydingco-Gatewood recapped the proceedings by saying, “The word today is sustainability.”
Tang reported that at the end of fiscal year 2018, the balance in the Settlement Fund’s investment account was $82.9 million, while the balance as of July 31, 2019, was at $97 million, showing a gain of $14.5 million. For the first time, the Settlement Fund investment trend is now increasing, Tang said.
In a later interview, Torres said even the fact that the CNMI just got hit by the worst typhoons ever, his administration still prioritized the retirees. He pointed out that, whatever others may have said about the future of the pension benefits of retirees, they should listen to what Tydingco-Gatewood had said.
Torres said that Tydingco-Gatewood has acknowledged that the work relationship the Torres administration has with Tang and the government’s $1-million weekly payment to the Settlement Fund has actually helped the Fund make investments and reduced the amounts being drawn down to pay for pensions.
Tang, along with the Settlement Fund’s legal counsel Nicole Torres-Ripple and the Fund’s investment consultant, Wilshire Investments principal Maggie Ralbovsky, made a presentation yesterday about the Fund’s financials covering the period from the fourth quarter fiscal year 2017 through third quarter fiscal year 2019.
“Today is a good day to enjoy the fruits of our labor,” Tang said.
To get the Settlement Fund to where it is today required the cooperation and commitment of Torres in making the payment required in the Johnson settlement agreement, Tang said.
Such cooperation and commitment have resulted in significant positive financial outcome for the Settlement Fund, she added.
“Without that, we wouldn’t be here today,” said the trustee, adding that Torres, Palacios, and the Legislature should get the credit.
She said they hope to continue working with them to obtain sustainability for the Settlement Fund.
“As you can see in our report, sustainability is important for the CNMI government to move forward and that’s going to require cooperation and commitment as well,” she said.
Tang said they look forward to working with the government in finding solutions or a way to achieve sustainability, which means to be fully funded.
Citing Ralbovsky’s presentation in court, Tang said they want to provide different options to the government and work with possibly some kind of a combination of funding and methodology to reach sustainability.
“It is something that it is important for not only to the retirees, but in order for the CNMI to move forward,” she said.
Johnson’s lead counsel, Margery S. Bronster, said the close to $100 million that the Settlement Fund now has is very good news.
“But I think the best news is cooperation between the government and the Settlement Fund to try and work toward a process that might eventually make the Settlement Fund independent and sustainable,” Bronster said.
Rep. Tina Sablan (Ind-Saipan), who was among the many lawmakers who attended the hearing, addressed the court. She said what happened to the Settlement Fund is “quite amazing.”
Sablan said she is a daughter of a retiree, who was scared about her pension benefits six years ago.
Sablan said she appreciates the thoroughness of the trustee’s report.
The lawmaker, however, expressed the concern of some retirees, especially those who have no access to the internet, to have a regular update from the trustee.
“Retirees just want more communication,” Sablan said.
Tang agreed to do more to provide updates to retirees who do not have internet access.