Fund sets new fee for members, retirees

The Retirement Fund will soon charge a fee for members and retirees who habitually ask for changes to their pension checks—an act described by the Fund officials as “consistent abuse” of its policy on amendments and change.

In an emergency meeting Friday noon, the board of trustees disclosed that regulation would be drafted for formal board adoption, with a planned effective date of Oct. 1, the start of fiscal year 2012.

Fund administrator Richard Villagomez reported to the board that this significant number of requests for changes entails additional works and uses up “too much” of the Fund’s resources, including personnel time and agency supplies.

He proposed a $25 fee for any member or retiree who will request for the early release of checks in cases of emergency and recommended other fees ranging from $5 to $25 for any other changes that are deemed “frequent.”

It was learned Friday that some members or retirees seem to have the habit of changing things with respect to their pension rates just days before the 15th and 30th of each month, resulting in more clerical works for the Fund’s employees.

Villagomez said that “too much” changes often result in redoing the whole process, which is time consuming and a waste of resources.

In the proposed regulation, changes will only be allowed perhaps every six months or during the annual update of members’ records.

Villagomez stressed that the new fee does not aim to generate revenue for the agency. More importantly, it aims to stop the “abuses” and change the behavior of members and retirees, he said.

Board counsel Viola Alepuyo said the proposed regulation would also result in substantial savings for the Fund in terms of resources and supplies.

Board member Adelina Roberto supports the new fee, citing the practice of commercial banks when it comes to making changes in checks.

“Because it costs us…we have to set a fee,” said Roberto.

The Fund processes over 600 paper checks every 15th and 30th of the month for members and retirees.

Last week, CNMI Superior Court associate judge Kenneth Govendo gave the Fund an oral order to set aside a specific amount for its defined benefit members to protect the Fund’s assets and ensure that members will be paid their monthly pensions.

The Fund disclosed that it may need over $100 million to comply with this order.

As of Friday, the market value of the Fund’s assets was estimated at $305 million. In May, this was at $320 million. The continuous drawdown of funds to pay for members’ pensions has been siphoning off money from the Fund’s portfolio—money that it could otherwise invest. If $100 million will be set aside for the Fund’s defined benefit members, this would mean fewer assets to invest.

On Friday, the board discussed this “emergency” situation and the agency’s crisis management policy on how it plans to address this. This involves all possible efforts that would help the Fund reduce its operational cost and many of these streamlining measures involve the passage of several legislation.

Among the possible streamlining measures are the transfer of the administration of Group Health Life Insurance program and the Workers Compensation Commission from the Retirement Fund and the sale of the Fund’s Home Loan Program, which will eliminate time and resources dedicated to these functions.