[B][I]Last of a two-part series[\/I][\/B]<\/p>\n
Regarding the proposal of the Retirement Fund\u2019s chair to consider investing in the Commonwealth Utilities Corp., it must be remembered that the Fund is not the personal property of the board of trustees and they would be well advised to take extreme care in their management of Fund assets. They are obligated by law to seek out the optimum safe and secure investment opportunities for member assets and CUC is certainly not a desirable investment for the retirees\u2019 money (see responsibilities of fiduciaries below). <\/p>\n
I call the reader\u2019s attention to the Annual Report for FY \u201892 issued to members of the Retirement Fund which states in pertinent part obligating the Board as follows:<\/p>\n
\u201cThe Board will continue to maintain its fiduciary responsibility and continue to protect the integrity and soundness of the Fund. It will continue to ward off any and all attempts to impair the financial condition and solvency of the Retirement Fund. This includes benefit improvements for a select few at the expense of the majority of the members. It will continue to establish positive policies to improve and enhance the program and the benefits within the confines of responsible fiscal behavior. It will also establish policies toward better delivery of services to its members.\u201d<\/p>\n
It is worth remembering that any local law which might attempt to absolve or indemnify Fund trustees of any abridgment of their fiduciary responsibilities is not in concrete until challenged and upheld in court.<\/p>\n
If CUC needs money\u2014and I\u2019m certain it does\u2014the utility should approach a bank for a loan that is established for that purpose or, failing bank approval, go back to CDA, which presumably was established for that purpose in the first place. If neither will lend the utility money, then why should the Retirement Fund?<\/p>\n
Frankly, the whole thing is certainly not prudent investment management in my opinion. For the past several years the Executive Branch of the Commonwealth government has consistently and intentionally neglected to adhere to 1CMC, Div. 8, Chapter 4, Section 8342 and 1 CMC, Div. 8, Chapter 7, Section 8371(a) thru (f) as related to its legal contributions to the Fund and possibly also payroll taxes collected under the mirror image of the IRS code for subsequent and timely deposit to the Fund\u2019s account for later use in the payment of pensions.<\/p>\n
Nor have funds earmarked for the retirement account been available for investment in interest earning instruments. This lamentable situation has continued uncorrected without adequate relief for so many years it is tantamount to theft by omission and may possibly involve the abridgment of federal law as concerns the withholding of employee contributions generated from federally funded programs and projects. I am reminded what my dear sweet granny once said, \u201cBilly, your mother may love you\u2014but the federal government will not if you so much as illegally misuse one dollar.\u201d <\/p>\n
In consideration of the above, why should the Fund invest any of the retirees\u2019 money in a government entity when the government itself has not honored its legal obligation to members of the Fund? Had the government upheld its part of its obligation and made the contributions to the Fund, which it was legally required to do but didn\u2019t? That money could then have been invested in interest earning instruments, thereby earning millions. Then\u2014and only then\u2014the Fund might have had money to invest. But the government didn\u2019t; it stiffed the retirees and now the Fund is itself too short of capital to help. Again, a sorry situation that goes right back to the central government\u2019s doorstep.<\/p>\n
I expect any day to learn of the next ridiculous proposal from the central government to request that the many millions due the Fund as a result of failure on the part of the government to meet its financial obligation be considered as an investment in CUC and thus cancel, forgive, waive, annul and forget the central government\u2019s debt obligation to the Fund. Don\u2019t buy it! <\/p>\n
As an invested \u201cretiree client\u201d and constituent of an unelected board of trustees (another thing which should be corrected), and as a pensioner along with several thousand others and their dependent families, the members are, indeed, the Fund\u2019s reason for existence. With actual experience as recipients of Fund performance the members should be permitted to introduce concerns relative to actions of both the central government, Legislature and Fund administrators regarding policies which could have, and often do have, an adverse impact on the overall long-term financial welfare of all retirees. After all, it\u2019s their money and they ought to have some say over decisions\u2014or a least veto power. <\/p>\n
For the legislators, I would like to call attention to the fact that of all the voters in the NMI, only two groups are easily united islandwide for purposes of veto power: PSS employees and the retirees and those members employed and still paying their share into the Fund\u2019s defined benefit plan. It\u2019s a \u201cpocketbook issue\u201d which should far outweigh party affiliation. <\/p>\n
For members of the Fund reading this, realize that elected officials have woefully neglected their responsibility to the community over the years with respect to CUC and now they want retirees to pay for what they failed to do. Namely, provide \u201cmake-up\u201d money to CUC under the disguise of an \u2018investment\u201d to \u201chopefully\u201d\u2014cross your fingers\u2014be repaid at some distant date far in the future in the form of dividends from CUC\u2019s profit earnings. Friends, that would not be an investment, it\u2019s a \u201cgiveaway\u201d by another name. (See Ms. Phyllis Ain\u2019s excellent piece titled, \u201cIs Anyone Out There Listening?\u201d – Saipan Tribune Archives, Aug. 5, 2008). <\/p>\n
The Fund chairman was quoted in a local paper as having stated the \u201cLegislature has passed laws that have added to the fiscal emergency of the Fund,\u201d thus acknowledging that some laws have contributed to the deterioration of Fund\u2019s portfolio. He\u2019s right. It has been estimated that at the present rate of diminishment the Fund might possibly be broke sometime around the year 2016 or 2018, at which time there will still be a power plant in one form or another but, unfortunately, that can\u2019t be said for certain of the retirees\u2019 pensions. Here\u2019s a way to put that short time in perspective. Just imagine, the year 2016 is eight years away but it is only as distant from this year as the inauguration of the Babauta – Benavente team\u2019s inauguration is in the past. It\u2019s a period almost as close to us today as the millennium celebration that ushered in the 21st century, which is now in back of us if you remember that.<\/p>\n
I invite any legislator or trustee of the Fund who disagrees with me to counter my accusations and opinions in writing in this media. I challenge them to find fault with my reasoning. <\/p>\n
In conclusion, as an economist and for the record, I oppose any loan to, or investment in CUC. For those retirees who agree with me and are concerned about their future financial security I highly recommend that you contact your representative and the Fund\u2019s board of trustees and make your opinion known. It\u2019s your money and you have every right to express your opinion. <\/p>\n
Finally, those readers who have followed any of my essays in this column might be interested in learning some of the fiduciary responsibilities of those entrusted with the management of other people\u2019s money. A publication (below) is available to help educate \u201cstockholders\u201d (that\u2019s the members of the Fund) about the fiduciary responsibilities of people who have the legal authority for exercising control over the funds of others (that\u2019s the board of trustees). Several topics discussed include personal liability for fiduciaries, investment duties and case law. The handbook is a reference guide for trustees, members of investment committees and others. In the handling of money, when one acts as a trustee, there is a fiduciary responsibility owed to the principal party. It is defined as a relationship imposed by law where someone has agreed to act in the capacity of a \u201ccaretaker\u201d of another\u2019s rights, assets and\/or well-being. The fiduciary owes an obligation to carry out the responsibilities with the utmost degree of \u201cgood faith, honesty, integrity, loyalty and undivided service of the beneficiaries interest.\u201d(1) Good faith has been interpreted to impose an obligation to act reasonably in order to avoid negligent handling of the beneficiary\u2019s interests as well the duty not to favor anyone else\u2019s interest (including the trustees own interest) over that of the beneficiary. (1) Source: A Handbook for Investment Fiduciaries published by the Foundation for Fiduciary Studies (www.ffstudies.org ).<\/p>\n
As mentioned previously in this article, local laws passed with the intention of\u2014or under the guise of\u2014absolving trustees or others of their fiduciary responsibilities may not hold up when challenged in court since laws are always subject to being overturned. Ask your friendly neighborhood lawyer for confirmation. <\/p>\n
Editor\u2019s Note: Previous articles concerning the Retirement Fund and other subjects are available online in the Saipan Tribune\u2019s archives and can be accessed by entering the author\u2019s name\u2014William Stewart\u2014in the website\u2019s Search bar. <\/p>\n","protected":false},"excerpt":{"rendered":"
Regarding the proposal of the Retirement Fund\u2019s chair to consider investing in the Commonwealth Utilities Corp., it must be remembered that the Fund is not the personal property of the board of trustees and they would be well advised to take extreme care in their management of Fund assets. They are obligated by law to seek out the optimum safe and secure investment opportunities for member assets and CUC is certainly not a desirable investment for the retirees\u2019 money (see responsibilities of fiduciaries below). <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-125588","post","type-post","status-publish","format-standard","hentry","category-local-news"],"_links":{"self":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/125588","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/comments?post=125588"}],"version-history":[{"count":0,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/125588\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/media?parent=125588"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/categories?post=125588"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/tags?post=125588"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}