Tang: Fund to be pay-as-you-go by 2019

Reiterating her report last year, Settlement Fund trustee Joyce C.H. Tang says the Fund is expected to become a pay-as-you-go entity by the year 2019.

By that time, the retirement income of all beneficiaries will be entirely dependent on the CNMI government’s contributions, said Tang in her report filed in federal court on Friday.

“Unless there is additional contribution which increases the Settlement Fund’s investment horizon, the Settlement Fund has very limited options for higher returns,” she said.

U.S. District Court for the NMI designated judge Frances Tydingco-Gatewood will hear updates on the status of the Settlement Fund this Friday morning.

The Settlement Fund was created under the settlement agreement in Betty Johnson’s class action last year.

In her report for combined fourth quarter fiscal year 2014 and first quarter fiscal year 2015, Tang disclosed that the beginning value of the Fund’s investments on Oct. 1, 2014, was $95.3 million, while its ending value on Dec. 31, 2014 was $86.8 million.

For the quarter ending Dec. 31, 2014 (first quarter 2015), the Settlement Fund liquidated $7.5 million of its investments to fund pension payments, and had a net investment gain of $129,000.

Tang said for the month ending Feb. 28, 2015, the Fund’s beginning investment value was $84.5 million while its ending investment value was $84.7 million.

In her view, the Saipan casino license fee of $15 million being paid by Best Sunshine International, Ltd. every year is better used for payment of the 75 percent pension and/or investment by the Settlement Fund so as to increase the investment horizon, instead of the 25 percent payment that the CNMI government is paying to retirees.

Tang said the Settlement Fund’s budget for fiscal year 2015 is $50.8 million—a drop of 1.60 percent compared to fiscal 2014.

Of this amount, she said, $48.6 million is allocated to Settlement Fund members’ pension benefits and disability payments; $887,878 for wages, salaries and employer expenses; $940,000 for consultant and professionals fees; $256,000 for general administrative expenses; and $10,000 for other expenses.

For its scheduled settlement agreement payments, the CNMI government is required to pay $27 million this year, a $2 million increase from fiscal 2014, Tang said.

She said the CNMI was prompt in making regular payments to meet its quarterly obligations for the fourth quarter of 2014 (July to September) and first quarter of 2015 (October to December).

For the second quarter of 2015 that began on Jan. 1, 2015, and ends on March 31, 2015, the amount of $9.45 million is due, she said. With three weeks left in the quarter, $4.7 million, which is 50 percent of the amount due this quarter, has to be paid by March 31, 2015, Tang said.

She raised concerns about the lack of regular payments for this quarter and had sought a meeting with Gov. Eloy S. Inos and his team to address these concerns.

Tang said that Inos had assured her the government’s cash receipts will improve near the end of March and that there will be enough money to pay the balance due for this quarter.

She noted that the CNMI government has also been making the 25 percent payments to make up for the reduction in pension payments (the “25 percent payments”).

“While it is commendable that the governor is trying to help the retirees, the Settlement Fund believes that these funds should be used to fund the regular 75 percent payments and/or invested to extend the investment horizon of the Settlement Fund,” Tang said.

Tang also hinted that they may file a court action against the Northern Marianas College, which is the only remaining autonomous agency that is not current and refuses to pay the Settlement Fund its outstanding balance of $71,749.43.

Tang said they will ask the U.S. District Court for the NMI to issue an order requiring NMC to pay all employer contributions at the rate of 30 percent, together with interest and penalties on the unpaid portion.