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Fund receives strong Senate support on repeal of derivative act
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Posted on Dec 19 2011
NMI Retirement Fund board of trustees chair Sixto K. Igisomar expressed optimism that the beneficiaries derivative act will soon be repealed following the assurance of senators that they will rescind the law.
Igisomar described as “very strong” the support the Fund received from members of the Senate, which is expected to entertain a bill to repeal the law during the holiday break.
“We’ve met with them [senators] and we had a discussion. We have an understanding of what is happening right now with the Fund. We got a very strong inclination of support from them and we’re very optimistic that they will continue to move forward and entertain repealing the derivative law,” said Igisomar.
It was last September when Public Law 17-51, or the beneficiaries derivative act, was signed despite the strong opposition from the Fund and trustees.
This law allows retirees to take legal action on behalf of trusts or the Fund when the trustees who manage them refuse to bring such actions. Because of its passage, service providers of the Fund had terminated their contracts due to negative impact of the law. These include the investment consultant Wilshire Associates, actuarial consultant Buck Consultants, and majority of the money managers that handle the Fund’s assets and portfolio.
Igisomar said that once repealed, the Fund is expecting the return of these key service providers because they have sent feelers of their willingness to serve the Fund anew.
From the initial $80-million negative financial impact of the law, Igisomar believes the adverse effect is greater now because of the opportunities lost in the investment market. He said there are two versions of the repealer bill, but the Fund is supportive of one bill pending the Senate’s action.
As of Nov. 30, the Fund’s estimated asset value is $261 million of which $55 million has already been transferred to CDARS program, or the certificate of deposit account registry service. It is the intent of the board to put all its portfolio into the program until a new investment adviser is named.
