Fund to withhold pensions of retirees without bank accounts

The NMI Retirement Fund is warning retirees who are still getting their pensions through paper checks that their benefits will be withheld next month if they fail to open a bank account where the agency can directly deposit their monies.

Fund legal counsel Carolyn Kern told the board at a recent meeting that affected beneficiaries have until April 1 to complete the process.

“If they don’t convert to ACH [automated clearinghouse deposit], their April 15 checks will be on hold until they convert to ACH,” said Kern.

Since the agency began requiring members to open an account for their benefits, only a handful have completed the process, according to Fund administrator Richard Villagomez. Since October last year, only 255 of 600 retirees who used to get paper checks have converted to ACH.

The Fund began requiring the issuance of pensions via direct bank deposits last year as part efforts to go paperless. The elimination of mailing more than 400 checks twice a month is projected to save the Fund about $5,000 in stamps alone every year. Together with the savings from administrative costs, the Fund expects to save $13,000 a year.

“This [conversion] is already ongoing and we reduced our paper checks [to date] because 255 of them had converted to ACH so we are expecting more,” said Villagomez.

Fund board chair Sixto Igisomar instructed the Fund management on Thursday to make a final announcement on the deadline to convert to ACH as well as other changes in the regulations.

Besides converting to ACH, the Fund will also reduce the interest on employee contributions-from the existing 3.5 percent to the bank’s prevailing rate-and impose a new $25 fee for retirees who habitually ask for changes in their information. All these policy changes will become effective by April 2012.

Under existing regulations, members are allowed to make changes in their beneficiary information once every year free of charge. However, Villagomez said that the Fund has been receiving a large number of habitual requests, including changes in addresses and other details on individual records, prompting them to come up with the $25 fee. He said the objective is to reduce the unnecessary extra workload and administrative cost of the Fund.

Beginning April, the board will also stop the “emergency” issuance of checks after the agency reported mounting requests for the emergency release of pension checks, either for a funeral notice, airline tickets, and medical reasons. Under the existing rules, a pensioner could ask for an early release of checks five days prior to the issuance date. Pension checks are issued every 15th and 30th of each month.