Unpopular decisions, including a possible tax increase, may have to be made if the Retirement Fund verges on bankruptcy, according to a senior lawmaker.<\/p>\n
Senate President Pete P. Reyes said the Legislature would have to find a way to keep the Fund floating, responding to a Saipan Tribune query whether the Legislature has a contingency plan in place should the Retirement Fund go down.<\/p>\n
\u201cIf there\u2019s a need to raise taxes then at that very time when the situation is necessary to be addressed, the Legislature may make some unpopular decisions,\u201d the senator said.<\/p>\n
He, however, underscored the need to stop the \u201cin-house fighting.\u201d<\/p>\n
\u201cThis is counterproductive for the administrator of the Retirement Fund to continue attacking the government. Instead of working with us to try and address this problem, we don\u2019t need this attack. We need to work together and find a solution to the problem and one of the solutions is floating a revenue bond,\u201d Reyes said.<\/p>\n
The Senate president said a Fund bankruptcy is possible, but that it is not just because of the CNMI government\u2019s inability to pay its mandated employer contributions. <\/p>\n
\u201cIt is also because of the economic situation nationwide and internationally. The Fund just lost several millions of dollars from its investment. And those were contributing factors. It\u2019s not just the inability of the government to pay,\u201d he pointed out.<\/p>\n
What if the government pays off all of its unfunded liability and the market crash happens, then the Fund would still lose everything, he added.<\/p>\n
\u201cThose possibilities exist as we can already see. Where would they [Fund] go?\u201d Reyes asked.<\/p>\n
Right now, the senator said, he supports a bill to float a revenue bond that would address the need for the government to fully pay off its liabilities to the Fund.<\/p>\n
\u201cThose are ideas that we can do and we can dedicate a source funding to repay the bond. So floating a revenue bond is a good idea,\u201d he said.<\/p>\n
Reyes said the Legislature needs to make sure that the Fund does not go bankrupt.<\/p>\n
The Fund\u2019s assets have been reported on a downslide since 2006. In that year, the central government stopped contributing to the pension program, forcing the Fund to liquidate assets to make pension payments.<\/p>\n
In fiscal year 2008, the Fund withdrew $35 million, with approximately half of that amount needed to pay retirees.<\/p>\n
In September 2008, a stock market crash reportedly wiped out $30 million of the Fund\u2019s investments. But after a week in the same month, the Fund\u2019s losses went down to $9 million as the market recovered.<\/p>\n","protected":false},"excerpt":{"rendered":"
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