Retirees, Fund ask House to pass bill repealing derivative suit law

Retirees and the NMI Retirement Fund appealed yesterday to House of Representatives members to pass a bill that will repeal a one-week-old law allowing Fund beneficiaries to sue on behalf of the pension program if the board refuses to bring such legal action, even as six money managers and consultants have already quit their contracts with the Fund within days of Public Law 17-51’s signing on Labor Day.

After the House rejected a Senate-amended budget bill yesterday afternoon, Speaker Eli Cabrera (R-Saipan) called for recess until 9am today to tackle other measures, one of which could be House Bill 17-220.

House FlooR Leader George Camacho (Ind-Saipan), author of the bill repealing PL 17-51 in its entirety, said he’s confident that his bill will pass the House.

“I feel that some members have seen the ill effects of P.L. 17-51 and will support HB 17-220,” Camacho told Saipan Tribune.

During yesterday’s session, NMI Retirement Fund administrator Richard Villagomez, Fund board of trustees chair Sixto Igisomar, retirees Donna Cruz and Ruth Tighe personally asked members to repeal the new law.

“You can actually make a difference to undo the tear and anomaly that is now Public Law 17-51,” Igisomar told lawmakers. “Prior to this law’s enactment, we spoke of uncertainties. Today, we are looking at the same consequences that we predicted before you.”

Villagomez, in his address to House members, said there are now at least six money managers and consultants have terminated their contracts with the Retirement Fund “in light of the added liabilities and uncertainties brought on by PL 17-51.”

He said a Tuesday letter to the speaker stated only four that have sent termination letters: actuary Buck Consultants (Sept. 12 termination letter); investment consultant Wilshire Associates Inc. (Sept. 9 termination); money manager Stralem & Co. Inc. (Sept. 6 termination letter); and money manager BlackRock Inc. (Sept. 13 letter stating it will not enter contract).

Villagomez said two more were added yesterday morning: money managers Fisher Investments and Richmond Capital.

“Proponents of P.L. 17-51 might argue that if the investment-related firms are leaving, it is because they have something to hide or are afraid to be sued. These firms were selected through an RFP process and compared to other respondents. With Fisher Investments, for example, there were over 30 other firms hat responded to that RFP and all of them were scrutinized to determine the best candidate,” he told lawmakers.

He said these “solid, reputable firms” are terminating their contracts with the Fund “because of the negative effects of the law,” specifically the added liabilities and uncertainties brought by it.

“Pass House Bill 17-220 to repeal Public Law 17-51 in its entirety as if it never existed. For the benefit of the retirees and members, please make contributions to Fund benefits a priority in the budgeting process,” he added.