Fund’s Reyes: PSS exemption is unfair

NMI Retirement Fund board chair Joseph Reyes said that the bill seeking to grant the Public School System exemption from paying the rate increase in employer contribution is unfair and [discriminatory].

“The bill has a very good intent but it’s unfair and discriminatory. How can you favor only one agency? You might as well exempt everybody, but we can’t afford that,” said Reyes yesterday.

He said giving PSS special consideration would be “hurting thousands of people in the long run.”

Based on a 2003 actuarial study, the Fund’s board of trustees decided in May this year to raise the government’s employer contribution rate from 24 percent to 36.7 percent effective Oct. 1 this year.

The PSS had sought for an exemption but the Fund denied it.

However, a bill, House Bill 14-369, granting PSS exemption from the increase passed both chambers in the Legislature recently. The bill aims to exempt PSS from the rate increase for the next five years.

PSS earlier said it should not be “penalized” for the additional rate because it has been paying its obligations to the Fund on time—unlike the central government.

“Since PSS has always paid its employer’s share of retirement and insurance, it is neither reasonable, nor fair to require PSS to pay a higher rate. This higher rate penalizes PSS when, instead, we should be rewarded for being faithful in paying the employer’s share. …We lived within our means and paid our bills. Now, we are being required to help pay off a debt that we had no hand in creating,” said Education Commissioner Rita H. Inos and Board of Education chair Roman Benavente in an earlier statement.

The PSS officials also said that it would negatively affect PSS’ funding for certain programs.

The Fund, however, said that the rate increase is needed for the survival of the agency. The Fund said that the rate should have actually been raised to 39.4 percent beginning FY 2003 as recommended in the actuarial study “but the board suspended such implementation because of budgetary constraints.”

The Fund said earlier that the rate increase was triggered by the nonpayment of the central government—Executive Branch, Legislature, Judicial Branch—of its employer contribution, the arrears of which now totals over $80 million.