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Inos: Govt will earmark $10M for the Fund next fiscal year
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Posted on Jul 13 2011
Acting governor Eloy S. Inos said the Fitial administration will set aside $10 million to pay for government employee contributions to the NMI Retirement Fund for fiscal year 2012.
He said the line-item budget is made to follow the Fund’s new directive that increased employee contribution from 37.9 percent to 60 percent. Inos, however, admitted that the cash-strapped CNMI government will find it hard to sustain the new rate.
“The Fund came out with a directive that the employee contribution rate beginning Oct. 1 of fiscal year 2012 would be 60 percent—that’s 60 cents for every dollar of payroll in the [defined benefit] plan and that’s not sustainable,” he said.
As it stands, the government is only funding 30 percent of the original 37.9 percent employer contribution, Inos said.
“So the difference is considered deficient which the general fund is absorbing and its part of the deficit. …At this point we budgeted $10 million for employee contribution. It’s all a function of the payroll cost. The $10 million could mean we might already achieve the 60 percent depending on the payroll cost,” he said.
The $10 million set aside for employee contributions to the Fund is expected to have an adverse effect on the government’s funding for the next fiscal year.
The Fitial administration is looking at a budget of $102 million in fiscal year 2012, which will fund 1,779 fulltime employees.
The local court ruled in June 2009 that the central government owes the Fund over $231 million in unpaid employer’s contributions. This amount has increased to over $300 million. Negotiating panels from both the Fund and the administration are working on a payment plan to satisfy this court judgment. Besides remitting the necessary taxes, the government was also mandated to pay a higher contribution rate.
