Fund to exclude adopted kids from beneficiaries list

The Retirement Fund will soon exclude adopted children from its list of members’ beneficiaries after finding out that a large number of its current members’ beneficiaries are classified as adopted, most of whom were applied after they retired.

A board committee is now reviewing a resolution on the non-recognition of post-retirement adoptions and it is expected to recommend the resolution’s approval at the board of trustees’ next meeting.

The resolution, once approved by the board, would require a public hearing on the matter.

At present, Fund policy does not bar adopted children from being declared beneficiaries by members and the board believes some retirees are abusing this loophole.

Fund board chair Juan T. Guerrero said yesterday that the proposed resolution will stop the practice of many retirees who adopt children of family members for purposes of adding them as “retirement beneficiaries.”

“Why are you adopting the kids of your family members? We’re seeing that somebody is doing an indecent proposal [at the expense of the Fund],” he told Saipan Tribune.

“We need to stop this practice because it affects the Fund’s interest and we need to protect it,” he said.

Guerrero said they found that a lot of members are circumventing the law by creating adoptions.

“The Fund is not designed for that purpose. We want to make sure that we’re keeping the same family structure intact in applying for beneficiaries,” he said.

The chairman disclosed that the decision to exclude adopted children is a mandate from the court.

“This is one of the issues tackled in court and we need to take action. This is actually a recommended step for the Fund to take,” he said. “The court says this is one way to move forward.”

The board of trustees had sued the CNMI government after it failed to pay its retirement obligations. The court has already issued a default judgment in favor of the Fund. What remains now is for the court to decide on the amount the government owes the Fund. The government claims it owes only $213 million; the Fund says it is $215 million.

Last Tuesday, the board disclosed that its unfunded liability now stands at $575 million for pension obligations.

Guerrero believes that clearing its list of beneficiaries would help the Fund lessen its unfunded obligations.

Guerrero disclosed that approximately $5 million is being regularly withdrawn from its investment funds to pay its pension obligations to members.

At present, total investment stands at $300 million, according to Guerrero.

“There’s no new money coming in…and we keep on throwing and liquidating [Fund investments] just to pay our pension obligations. As long as the administration and the Legislature fails to provide for retirement obligation…the Fund will eventually collapse,” he said.

In Tuesday’s board meeting, Fund comptroller David Demapan reported that for the period ending April 30, 2009, the Fund has already withdrawn $1.3 million to pay for pension benefits.

The balance of $5 million—after deducting the $1.3 million—was paid out using the payment received from other employers.