Chamber to Fund: Cut current and future retirement benefits

Chamber president Douglas Brennan, in a three-page letter to Fund administrator Richard Villagomez, said the Chamber is frankly “aghast” at what has been allowed to happen to the Fund “by all those with a hand in it.”

These include all past administrations “which spent as though they’re immune to the forces of nature, all the CNMI Legislatures which couldn’t afford to tell their constituencies what they needed to hear, all those receiving benefits that whine about their rights to continue as though there’s no tomorrow and the NMIRF itself.”

“It’s about time everyone realizes the Fund seems to have been built to collapse upon itself with its unprecedented and unmatched system of payouts,” Brennan told Villagomez. The Fund administrator could not be immediately reached for comment.

Brennan, toward the end of his letter, said it takes no imagination to know what will happen if the Fund goes broke in less than two years.

He said there will be unparalleled spiraling of poverty within the CNMI, and it will fall farther than it took for it to become the brightest and fastest growing economy in the U.S. just two decades ago.

“How did this happen? It makes absolutely no difference. Stop blaming, stop avoiding, stop guessing, stop deferring and stop politicking,” Brennan told Villagomez.

Brennan urged Villagomez to “go to current retirement beneficiaries, approximately 2,400 of them, and tell them what needs to be done to prevent their income from ending in less than two years.”

“Also let the 2,800 active employees know what needs to be done to protect their future. It is upon you to act,” Brennan told Villagomez.

The Chamber president told the Fund administrator to “cut benefits on a needs basis.”

“Those that earned less should suffer less. Those that have large retirement checks every month need a greater percentage of those checks held for a future we can imagine if we do the right thing. The sense of entitlement needs to end now,” Brennan concluded in his letter.

The Chamber submitted letters and position statements within the past few months related to the Fund.

Among these letters is one addressed to the presiding officers of the Legislature in June telling them that the Legislature cannot expect the private business sector to assume financial responsibility for the Fund’s payments to current CNMI government retirees by raising taxes, and on how to approach the Fund’s dilemma.

Brennan said nothing has really changed since those documents were delivered. “In fact, the situation has worsened,” he added.

The Chamber suggested ways to decrease the demand on the Fund’s dwindling resources.

First is to avoid increasing the tax burden on the business sector, those earning salaries in the CNMI and any individual or company entitled to a tax rebate at the end of the calendar year.

The second alternative is to reduce the level of retirement benefits to current and future retirees.

“The fact of the matter is most current retirees have already recovered what they’ve contributed to the NMIRF. Those persons and their dependents need to do what the rest of [us] have already done, or are being forced into doing; downsizing, lessening their demand and reducing overhead and spending levels,” Brennan told Villagomez.

The last possibility is for an economic miracle to happen-such as factories re-appearing or reaching 1 million tourist arrivals per year that would allow the Fund to continue to pay retirement benefits at its current rate.

Rep. Joseph Palacios (R-Saipan) introduced early this month a bill that would eliminate the cash-strapped Fund’s enhanced benefit accrual formula and special cost of living allowance. He conceded, however, that it would be hard to convince lawmakers to pass the bill in an election year.