Previous Story
Fund: It’s 36 percent, not 24 percent
|
Posted on Nov 03 2006
While some government authorities may have cited a 24 percent employer contribution, the NMI Retirement Fund clarifies that the correct rate is up at 36.7 percent beginning fiscal year 2006.
“All agencies are actually charged 36 percent in employer contribution. It’s only the Public School System that is exempted, which made other agencies mad at us. That exemption, however, was granted by law,” said Fund administrator Mark Aguon in an interview.
He said all other agencies, except the central government, which had a law passed to authorize it to suspend its contribution to the Fund for a year, have been complying with the 36.7 percent rate.
He said that independent agencies use their own budget to pay off their employer contribution.
Citing a 2003 actuarial study, the Fund board decided in May 2005 to raise the government’s employer contribution rate from 24 percent to 36.7 percent effective Oct. 1, 2006.
The PSS had sought for an exemption but the Fund denied it. The Legislature, however, came to the aid of PSS and passed a bill granting PSS an exemption from the increase, which was later signed into law.
The Fund had said that the rate should have actually been raised to 39.4 percent beginning in FY 2003, as recommended in the actuarial study “but the board suspended such implementation because of budgetary constraints.”
The Fund earlier said that the rate increase was triggered by the nonpayment of the central government—Executive Branch, Legislature, and the Judicial Branch—of its employer contributions totaling $85 million as of April this year.
PSS had reasoned that it should not be “penalized” for the additional rate because it has been paying its obligations to the Fund on time. It also warned that complying with the new regulation would negatively affect its funding for certain programs.
Other autonomous agencies made the same appeal but they were not included in the exemption law.
The Fund said the rate increase is needed to ensure the survival of the retirement system.
The Fund’s unfunded liability totals $552 million as of FY 2005. Its total assets are worth nearly $500 million.
