The Leaning Tower of Pisa provides a lesson for NMI retirees

There’s a sort of mental distraction related to being unaware or unappreciative of a particular situation of which the neglected realization can affect some people and distort their perspective.

In the NMI there are serious issues that should have long been of concern to all retirees but apparently for many people, they haven’t been. I have in mind the dire situation of bankruptcy facing the Retirement Fund as result of the central government’s intentional and inexcusable neglect of its contractual obligation toward paying its employer’s contribution, now totaling many hundreds of millions of dollars. From as far back as 1997 and until 2002, the government only made partial, incomplete and inadequate payments to the Fund based on written agreements with the Fund and has even reneged on those agreements and hasn’t made any payments for the past six years. Just imagine that!

As things now stand, the situation is analogous to that of the Titanic—steaming along until it met its disastrous end—slowly sinking for all to see. While the band played on!

I’ll move away from the above subject for a bit, hopefully, to make a related point.

Once in Italy, I first noticed a strange human trait of an occasional lack of cognizance and perception, which reminded me of the retirement situation in the NMI. Basically, such a realization can concern any situation that might otherwise be considered obvious but upon closer examination is far from being so. The occurrence can often surface in which a person thinks they know something—anything—but in actuality do not really know it at all. It’s self-deception in the extreme.

I call it the “Leaning Tower of Pisa Syndrome” and relate it to the condition of the Retirement Fund as I perceive the present condition to be. Let me explain this profound epiphany and set the scene to make my point and afterward you see if you too have experienced something similar. I’ll bet you have.

In sharing my observation to provide an example, I would like to pose the question: “At what age did you first become aware that there was a Leaning Tower of Pisa ?” I would imagine that it was an early age, perhaps as a result of a photograph in a first grade primer.

I once lived in a suburb of Pisa, Italy and had many occasions to visit this wonderful structure completed in the 14th century. Like millions of others I had always known that it leaned precipitously. But one does not really appreciate the full impact of its height and awkward slant until it is actually witnessed in person. Approaching the piazza where it stands, the area is reached by walking down an avenue where, at street level, the imbalanced structure is shielded from view by three and four story buildings even though a municipal ordinance decrees that nothing may built higher than the tower. Turning the corner for an unencumbered, clear view, the magnificent ancient edifice of 58.4 meters (192 feet) comes into full and sudden view. Moving closer your instinct tells you not to stand beneath the side that first began to tilt during construction in the 12th century.

Positioned at the corner of the street at the point pedestrians turn at a right angle is a typical Italian outdoor cafe. Sitting there watching virtually every nationality in the world walk to the corner and turn where the tower looms into full view with an overpowering presence, every one of the visitors, speaking excitingly in their native language, invariably exclaims, “It really does lean.”

Sitting there and hearing the same expression of astonishment over and over in a multitude of foreign languages among people who already knew the tower leaned by virtue of the reason for their visit and who—one would think—should be insulated from the sudden visual shock, prompted me to coin the phrase, “the Leaning Tower of Pisa syndrome.” For me this example illustrates that we human beings can be aware of something—or some event—but, in reality, not fully know it. Those people knew the structure leaned—to see it was the reason for their visit—yet they all were astounded to see it and to have the image, which was so long in their mind, finally confirmed.

The same thing happens with a child when you tell it “fire burns.” So often it has to be experienced to be believed. Think about that for a moment and apply the reasoning to the present condition of the Retirement Fund.

What does the above story have to do with the Commonwealth? It’s all a matter of awareness. As an observer of the deteriorating condition of the Retirement Fund for many years, it has occurred to me that some lawmakers and others in the administration, past and present, either don’t care or simply fail to comprehend the serious consequences certain to result from the continued neglect on the part of the central government. They have been clearly and repeatedly told by Fund officials that the base of the Commonwealth’s “retirement tower” and that of the member’s future financial security now leans toward imminent collapse as a result of the central government failure to meet its contractual obligation to pay the money it owes the members. Some seem to have a hard time realizing it and getting the message.

The point I wish to make is that you can know something—but really not know it in the fullest sense of comprehension. That’s the way it is for many with respect to the sinking condition of the Retirement Fund. If you are a member, now is the time to insist the central government take action to pay what it owes.

If the central government’s neglect in making its obligatory employer’s contribution payments wasn’t enough bad news for the future financial security of the members, those who have kept up with the Fund’s losses in the stock market know that the time to follow the advice of Fund management is now. It’s 5 minutes ‘til midnight and possibly the last chance to mitigate some of the financial damage that has been sustained by the members from the unprecedented market decline. First, realize that it is not smart—and it is the worst possible time—to withdraw funds from a sinking market to meet pension payments. Currently the Fund is forced to do just that and to sell at the very worst time when the value of the member’s investments are so low. Second, realize that somewhere at these low market levels will be the best time to buy. Just where and when that level arrives I don’t know, but the Fund’s money managers should be positioned to recognize the moment and seize the opportunity to invest at low bargain prices.

Of course, in order to do this the Fund needs the capital ready and available to invest and the only place to get it is from the central government in an amount sufficiently large enough to recover some of the losses previously experienced. I know Fund officials know this but I’m not certain if the central government does—or even cares. If something isn’t done, and soon, the government’s cancer of indifference and neglect will soon result in the death of the patient. Write that on the wall. If you are a member of the Fund, ask your government what it intends to do and demand an answer.