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Fund’s unfunded liability hits $911M
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Posted on Jul 10 2011
As of April 30 this year, the NMI Retirement Fund’s accrued unfunded liability stood at an estimated $911.1 million, which means that if the program is terminated now, it will not have enough funds to pay its obligation to members
Esther Ada, the Fund’s deputy administrator, told the board during Friday’s meeting that for every dollar that the Fund owes beneficiaries, only about 36 percent is funded and the rest is unfunded.
Fund officials earlier said that for the Fund to be fully funded until 2045, it needs about $860 million in its investment portfolio.
Preliminary records on Friday indicate that the Fund’s investments had a market value of only $311 million as of June 30, 2011. This is a significant drop from April’s estimated assets of $329 million but is a slight improvement over the $305 million posted in May.
The trustees attribute the decline in the value of its assets to the volatile market and the continuous drawdown from the investment fund. They said that over $6 million was drawn down in May to pay for pension benefits, while the rest of the losses was due to the volatile market.
According to Ada, the Fund’s drawdown as of June 2 amounted to $37.4 million.
For fiscal year 2011, the board of trustees capped total drawdowns at $54.2 million. The Fund still has $15.8 million in authorized drawdown for the rest of the fiscal year.
Of the estimated $311 million assets, the estimated monthly return was a negative -1.36 percent.
The fiscal year to date return on investment as of June 30 was 13.2 percent while for calendar year to date, return on investment was at 5.36 percent.
The Fund’s net assets are invested in stock and money market fund, government bonds, corporate bonds, common stocks, and hedge fund. It has also local investments that include the Member Home Loan Program, investment in the Group Health Life Insurance, the judicial building loan, and the Commonwealth Government Employee Credit Union.
Saipan Tribune learned that in 2007, the Fund’s accrued unfunded liability was over $360 million, mainly due to the government’s failure to remit contributions to the pension system and stock market losses.
