Inos: Exodus of Fund service providers ‘disappointing’

Acting governor Eloy S. Inos described as “disappointing” the exodus of NMI Retirement Fund service providers due to the passage of the Beneficiaries Derivative Act, saying this should not stop the agency from looking for their replacement so as not to hamper the pension program’s operations.

“It’s just disappointing, but we’re going to figure out other ways. We need to go out and look for money managers, new consultants, and actuarial consultant and we should not just sit back and do nothing about it,” he said Tuesday during the bi-annual membership meeting of Marianas Visitors Authority.

To date, seven service providers have terminated their contracts with the Fund. These include investment consultant Wilshire Associates, actuary adviser Buck Consultants, long-time independent auditor J. Scott Magliari, and four other money managers.

All of these firms backed out from servicing the Fund due to the anticipated increased cost in doing business with the agency as a result of potential litigations.

Inos also disclosed yesterday that the Fitial administration will argue the motion filed by some retirees to transfer the government case versus the Fund from the Superior Court to the federal district court. Inos said the administration will counter the motion.

Commonwealth Retirees Association member Sapuro Rayphand, through lawyer Bruce Jorgensen, had asked the U.S. District Court for the NMI to allow the removal of the case from the superior to district court.

“We will argue it because there are certain priorities,” Inos said, adding that the administration is just being “practical” about the matter.

He also expressed support for a new pension obligation bond.

“Unfortunately, POB did not pass in the last election but we encourage the Legislature to deliberate on it one more time and hopefully pass it this next election,” he said.

Voters in November 2010 rejected an initiative allowing the government to borrow money to pay the government’s debt of over $300 million with the Fund.

The Fund’s investment consultant earlier stated that a pension obligation bond is not the solution to the immediate problems of the pension plan, which is projected to last only up to three years if no new money comes in.

The government owes the Fund over $300 million in outstanding employer contributions.