Fund chair: We’ve got to follow the retirement law

The NMI Retirement Fund shall comply with the new retirement law, which provides that it will stop vesting credits for education service effective 2003, based on Public Law 13-60 or the Retirement Integrity Assurance Act.

“The law is the law. Regulations are put in place to put teeth [in the law], but not to change the law,” said Fund board chair Joseph Reyes Friday.

The board adopted the proposed rules and regulations on the 2003 retirement law during its meeting Thursday evening. The regulations are now up for public comment.

Some government employees pursuing a degree had earlier appealed for exemption from the law provision.

Reyes clarified that Gov. Juan N. Babauta, who received the appeals from concerned employees, only asked for an interpretation of the law. “The governor is asking for our interpretation of the law regarding the subject,” he said.

In particular, he said the governor inquired as to the law’s effectivity date—whether it would follow 2003 or 2005, which is the adoption of its rules and regulations.

Reyes said that, based on the Attorney General’s Office opinion, “chances are…it’s 2003.”

He said changes to the proposed rules could be made during the public comment period.

Fund administrator Karl T. Reyes earlier said that Gov. Juan N. Babauta had asked the Fund if it could exempt employees who were enrolled in college when the law was enacted.

“The governor’s request entails that these people when they were working in the last five years, they knew that if they get a degree, they’d be given credit. Now that the law is passed, we stopped it before they could get their degree,” said Reyes.

He said there are about four or five individuals affected by the law.

P.L. 13-60 aims to remove unfunded liabilities in the government’s retirement program, which now total over $526 million, and enhance its financial solvency and viability.

Likewise, the law merges Class I and Class II retirement categories; discourages early withdrawal of contributions; and adopts the U.S. Social Security System’s cost of living allowance model, among others.

To maintain financial integrity, the law repeals the 3-percent bonus for certain elected officials, benefits for boards and commission members, vesting credits for education service, military service, compensatory time, and used sick leave, and prior service vesting credit.

The law imposes penalties on early withdrawal of contributions and restricts re-employment for a period of six months unless the contributions are returned to the Fund.

Further, the law calls for the restructuring of the early retirement provision for Class I members to encourage them to retire before reaching 62 years.

Government authorities believe that these changes will reduce government payroll costs and free up additional funds for remittance as employer contribution to the Retirement Fund.

Currently, the government is required to shoulder 36.7 percent of employees’ retirement contribution.