Retirement Fund suppports scrapping bonus

Amid slow action by the Legislature on the removal of the 30 percent retirement bonus granted to civil service employees, the NMI Retirement Fund has underlined the need to implement the drastic measure in light of the weak financial condition of the government.

Acting Administrator Fred Camacho said the agency would not help the government meet the cash benefits, which has been an initiative from both the executive and legislative branches, despite talks from some lawmakers about asking their assistance.

“We support the idea of abolishing the 30 percent bonus, but that is something that they have to deal with because of the resistance of the statute,” he told in an interview.

Although the House of Representatives passed a bill last January to repeal the law providing a lumpsum bonus to retiring government employees equivalent to 30 percent of their annual salary, the Senate has yet to act on the proposal.

For fear it may worsen CNMI’s financial woes, House Bill 11-359 was immediately filed to grandfather those employees eligible for the cash awards by December 15 of this year, while ensuring payment to recent retirees who have yet to receive their bonus.

Given to civil service employees who have 20 years of government service when they retire, the benefit has drawn controversy in recent months due to inability of the cash-strapped government to pay out the awards.

While the Retirement Fund has in the past intervened to bail out the administration on the bonus, the board has decided to keep their hands off this time due to a potential effect on its financial shape.

“They can ask for assistance and in the past they have,” Camacho explained, “but the board has taken the position that to give in to that request or put out additional money in as far as the 30 percent bonus is concerned is not in the best interest of the Retirement Fund.”

He stressed, however, that administration officials must work out with the legislators as well as civil service employees to prevent any misunderstanding on the urgent measure.

“To terminate it, it will have an impact in as far as probably employee morale or on those that have anticipated receiving the amount. It is something that they have to work out what is best for the government and what is acceptable to its employees,” Camacho said.

The Northern Marianas is reeling from its worst crisis in years spawned by the prolonged economic turmoil in Asia, its main source of tourism revenues and investments, that has substantially pulled down local revenues in recent months.

Last October, Tenorio asked the legislature to repeal or amend existing laws deemed to cost the government millions of dollars in additional expenditures, including the lumpsum retirement bonus.

Under HB 11-359, the benefits will be eliminated after December 15. At least 110 civil servants are eligible to receive the bonus as of last November and non-receipt of the money may result to a reduction in their annual pension.