PSS exemption to have negative impact on employees’ retirement

The NMI Fund Board of Trustees has warned that the Public School System’s exemption from paying the increased retirement contribution would negatively impact the retirement claims of its own employees.

“It [the law] would create a devastating impact on the current members of the PSS. You know that when people want to retire, they want to know what their earnings would be and chances are, they [PSS personnel] would be asking, ‘Why is my pension only this much?’” said Fund board chair Joseph Reyes.

Further, he said that it would cause the Fund to incur costs to recalculate the PSS’ employees’ retirement benefits.

“We have enough problems right now on class 1 and 2 [merging]. It also costs money. I’m not anti-PSS. I support PSS. But this law might be screwing up the future financial security of a person who has vested or earned retirement,” he said.

Rather than just citing lack of funding to pay the increased retirement contribution, he said that PSS’ spending should better be checked.

“It would be interesting to know the cost, comparative earning, salary, number of personnel in the administration of PSS, and how much they make, other expenses like vehicles and a lot more, including supplies. The management should look into their cost-cutting measures so that they can carry out the mandate to educate our kids,” he said.

Reyes earlier criticized the law as unfair and discriminating since it favors only PSS.

The Fund raised the government’s employer contribution rate from 24 percent to 36.7 percent following a 2003 actuarial study that recommended such a step.

“We are mandated by law to collaborate and adopt the findings of an actuarial study because we are obligated as a board to have the Fund funded,” he said.

The PSS earlier sought for an exemption but the Fund denied it. This led to a lawmaker introducing House Bill 14-369, granting PSS exemption from the increase.

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

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

For its part, 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 central government currently owes the Fund $85 million in employer contributions.