‘PSS exemption from rate hike will burden other govt agencies’

If the Public School System is exempted from paying the 12-percent increase in retirement contributions, the NMI Retirement Fund will have no other choice but to let other agencies take up the slack, said Fund administrator Karl T. Reyes yesterday.

He said this is a comment from the Fund’s actuarial consultant when asked on the possibility of PSS being exempted from paying the 36.7 percent contribution rate.

“They [consultant] are saying that if PSS is exempted, then somebody has to carry that burden. This means additional rate has to be imposed on other agencies,” said Reyes.

The government used to pay 24 percent in employer contribution. In May this year, the Fund increased the rate to 36.7 percent, which officially becomes effective beginning Oct. 1, 2005.

Lately, the Legislature passed a bill granting PSS a five-year exemption from paying the 12-percent rate increase. House Bill 14-369 is authored by Rep. David Apatang.

Fund board chair Joseph Reyes had described the bill as “unfair and discriminatory.”

PSS earlier said that it should not be penalized with the additional rate since it is 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,” said PSS.

PSS warned that the increase would negatively affect its funding for certain programs.

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

Fund administrator Reyes said that unfunded liabilities now total $526 million—not $400 million as earlier claimed—which includes the $80 million plus accumulated debt of the central government in employer contribution.

He said that even if this amount is settled now, the Fund would only be able to reduce the rate contribution to 31 percent.

“Even if $80 million is paid today, we can only reduce the rate to 31 percent,” he said.

The government pays over $800,000 per pay period to the Fund for its retirement contribution.