144 withdraw Fund contributions

Worse, the number of members withdrawing their contributions is expected to increase after the Fund’s bankruptcy case is resolved.

NMI Retirement Fund administrator Richard Villagomez told Saipan Tribune yesterday that the agency recorded 144 withdrawals from October 2011 to April this year.

This figure was as of April 15, 2012-two days prior to the Fund’s filing of a bankruptcy petition in court, which generally makes decisions for the pension agency for now until the case is formally dismissed.

Villagomez said the total amount refunded by these 144 members amounted to $2.4 million. Since the bankruptcy filing, many government employees have resigned in order to obtain a refund on their contributions.

Examples are longtime employees at the Commonwealth Health Center, majority of whom are nurses, who quit their jobs to enable them to withdraw their contributions.

The first batch of 17 nurses who resigned, Saipan Tribune learned, have yet to be paid their refunds because all decisions are up to the bankruptcy court.

Saipan Tribune also learned that many at the Public School System have given up their posts to get back their Fund contributions.

Early last month, the Fund asked the bankruptcy court to allow it to continue paying benefits to members. No formal order has been issued yet. Benefit payments cover pensions and disability annuitants.

In fiscal year 2011, a total of 389 members withdrew their Fund contributions. This is a 33-percent increase over fiscal year 2010, which had 292 members refunding their contributions.

The Fund paid out a total of $5.7 million in refunds in fiscal year 2011. In fiscal year 2010, total refunds amounted to $3.363 million.

Based on Fund records, the agency paid out the following refunds in the past 10 years: $3.9 million in 2000; $3.2 million in 2001; $4.1 million in 2002; $3.5 million in 2003; $3 million in 2004; $2.9 million in 2005; $4.5 million in 2006; $5.2 million in 2007; $5.5 million in 2008; and $4.8 million in 2009.

Saipan Tribune learned that refunds are made for a variety of reasons. When employees withdraw, they do not need to state a reason for doing so. The Fund believes that among the reasons for these withdrawals include the economic difficulty, government austerity, private sector layoff, and now the uncertainty of the Fund operation and other challenges.

The volume of refunds is expected to increase significantly this year once the bankruptcy case is over and if legislation allowing government employees to withdraw 50 percent of their contributions without resigning is passed into law.

House Bill 17-226, which the Fund earlier said will be a death blow to the agency, seeks to allow active members of the defined benefit plan to withdraw their contributions without severance of employment or penalty. This means all 2,996 members can possibly withdraw their contributions. Gov. Benigno R. Fitial vetoed the measure but an amendment to the bill is now being worked out at the Legislature.