Govt has $4.2M in retirement arrears

The government has been five pay periods behind in employer’s contribution amounting to some $4.2 million.

NMI Fund administrator Karl T. Reyes said the government paid the Fund $1.2 million on Nov. 29, but this has not settled the pay periods covering September and October and one pay period in December.

The government usually pays $835,000 to $850,000 in employer contribution per pay period.

“They paid some $1.2 million recently but it’s not enough. We’re still waiting for government to pay on Wednesday,” said Reyes.

The government is required to shoulder 24 percent of the retirement contributions for about 5,000 employees.

The 24 percent rate was raised by the Fund to 36.7 percent effective October this year in view of the government’s huge debt.

Only two government agencies have been able to comply with the new policy as others cite lack of funding.

As of May this year, the government’s total arrears in retirement contribution reached $80 million.

This amount reflects the central government’s unpaid employer’s contribution from December 2001 to present.

The Fund said that payments made by the government are credited to the oldest accounts—covering fiscal years 1998 to 2001.

Finance authorities said that payments to the Fund were current until June 1998.

The Fund said that the government ceased payments altogether from August 1999 until September 2001.

Meantime, the Fund said that total employer’s contribution paid from October 2001 to September 2005 amounted to $56.3 million.

The Fund said that the government’s payment agreement with the agency calls for some $500,000 payment every pay period.

The Babauta administration increased this to $850,000, the Fund said.

Reyes said the actual amount that the Fund is supposed to collect each pay period from the government is $1.4 million.

With the government promising to remit only $850,000 per pay period, this means there is a shortfall of $550,000 every pay period, or $1.1 million a month.

Such a shortfall jacks up the government’s unfunded liability to the Fund, which has ballooned to $526 million.

He said that since the Fund has not been getting the entire amount from the government, it uses current contributions to pay out its obligations to retirees.

There are over 2,000 government retirees.