120 retirees told to return $5M

NMI Retirement Fund administrator Richard S. Villagomez said the Fund is trying to recoup from 120 retirees an estimated $5 million in overpayments arising from the pension agency’s own misapplication of a law prior to 2001. Affected retirees said they plan to meet Thursday to discuss the possibility of a class action suit against the Fund.

The Fund sent the letters on or about May 8, 2012, addressed to retirees who separated from government as far back as 19 years ago or longer.

One of those letters was addressed to former police officer and former quarantine officer Frederick C. Ngeskabei, 52, who is being asked to return $225,000 to the Fund by having up to 50 percent cut in his bi-monthly pension until the full amount is recovered.

“I retired in 1993, that’s 19 years ago and now they want me to pay back $225,000. It’s not my fault. Why do I have to suffer from their own mistakes?” Ngeskabei told Saipan Tribune yesterday.

The Fund has also asked retired police major Antonio O. Kiyoshi to pay back $93,000. Kiyoshi granted an interview with the Saipan Tribune last week, saying the Fund should not punish retirees for the agency’s own mistakes.

Ngeskabei and Kiyoshi said they also plan to appeal with the Fund board of trustees, but the board now lacks a quorum.

‘Duty-bound to recollect’

Rep. Tony Sablan (R-Saipan) wrote a letter to the Fund’s Villagomez on May 17, the day the story about Kiyoshi came out, to inquire about the number of retirees that were mailed a similar letter, the total dollar amount involved, and the statutory reference or basis for the Fund’s decision, among other things.

Villagomez, in a May 21 response to Sablan’s letter, said the Fund sent approximately 120 adverse action letters resulting from the Fund’s internal audit of the top overtime earners.

He said a number of benefits was overstated as a result of a misapplication of the law prior to 2001.

“I am duty bound to recollect these funds as these funds are necessary to pay properly accrued benefits to other members. The total amount that we seek to recoup as a result of these 120 letters is approximately $5,000,000,” Villagomez told Sablan in his letter.

Villagomez said these adverse actions are based upon the law in place “at the time these individuals retired.” He was referring to 1 CMC 8313(p) that required overtime and compensatory time to be used to calculate eligibility only but not to calculate the amount of benefit given to a retiree.

“The affected members’ benefit amounts were calculated taking overtime and compensatory time into consideration in violation of this provision. As stated above, these are administrative actions appealable to the board of trustees. While the board of trustees has been kept apprised of the ongoing audit, the board of trustees took no part in my decision as it was an administrative matter. This is consistent with the Fund’s administrative process,” Villagomez told Sablan.

‘Blocking the Fund’

Sablan, in an interview yesterday, said he is drafting a bill that would prevent the Fund from going after these 120 retirees because of the Fund’s own miscalculations. He said he might introduce the bill on the floor in today’s session, or in the next few days.

“In these difficult times, retirees are forced to have up to 50 percent cut in their benefits every other week, and it’s not even their fault. And with the bankruptcy proceedings, who knows, these same retirees will have additional cuts of say 50 percent in their pensions so these retirees will end up not receiving any pension at all,” Sablan told Saipan Tribune.

He said he asked the House legal counsel to see whether a statue of limitation could apply to the Fund matter.

“The Fund allowed this mistake to go on for so long. We’re not talking about one year or two years but a decade or more. Now all of a sudden they want these people who retired several years ago to pay back,” said Sablan, a former immigration director and currently chairman of the Saipan and Northern Islands Legislative Delegation’s Committee on Health, Education and Welfare.

Ngeskabei said retirees who received adverse action letters from the Fund plan to meet on Thursday, 6pm, at Minatchom Atdao pavilion in Susupe to map out a plan to address their concerns, including a possible class action suit against the Fund.

“I am currently receiving $39,000 a year in pension. The Fund said it will be reduced to $27,000. We all know that the economy is so bad, the prices of medicine, gas and almost every item are high, we can’t afford to lose up to 50 percent of our pension every two weeks,” he added.

Sablan said his office has heard of a lot of complaints and concerns from retirees about the notices of adverse action, prompting him to write to the Fund.

Sen. Frank Cruz (R-Tinian) and Senate floor leader Pete Reyes (R-Saipan) had said the Fund should be prepared for a possible class action from affected retirees.

The NMI Retirement Fund is the first public pension agency on U.S. soil to seek bankruptcy protection in court.