NMIRF junks plan to raise gov’t share

The NMI Retirement Fund Board has abandoned a recommendation to increase by 2 percent the government’s contribution for its workers in order to help the current administration cope with dwindling cash resources, according to Administrator Juan S. Torres.

An actuarial study had proposed to hike the share pitched in by the government to 26 percent from 24 percent to keep the NMIRF financially sound.

“The board had been mindful of the predicament this government is in and decided unanimously to forego the recommendations of the actuary,” Mr. Torres said.

The Fund chief has already informed Gov. Pedro P. Tenorio about the board’s decision to remain in status quo. Mr. Torres said the governor was surprised to learn that the board will not implement any increase since there had been erroneous reports claiming that the new rate will be enforced soon.

“How can it be implemented when it was never approved by the board. It was just a recommendation of the actuarial consultant,” said Mr. Torres. He said the board will wait until the CNMI government’s financial condition improves before adopting the proposed increase in government contribution.

The government has been behind in its monthly contribution to the Fund which stands at $25 million after it turned over a $1.5 million check to NMIRF last Nov. 8. Despite delay in government’s contribution, Mr. Torres assured retirees that the Fund has enough money to make annuity payments.

“But if push comes to shove, I will recommend to the board to maybe rebalance our assets allocation on investments in general fix income,” he said.

More than 70 percent of NMIRF’s total assets, which came from excess retirement contributions and pension pay of government employees, are invested in the stock market, while the rest are funneled into bonds, treasury bills and other securities.

Some $10 million has recently been invested in large cap stocks by NMIRF’s newly-hired fund manager, the First Hawaiian Bank, based on the recommendation of the portfolio consultant, Merryll Lynch.

The wild swings in Asia since the financial crisis in the region begun in July 1997 led the $15 million investment of the Fund in February 1996 to drop to $7 million in 1998. As the region has slowly shown signs of recovery, the value picked up to $10.7 million in October 1999.

“We hope the trend continues so we can recover our investment in the very near future,” said Mr. Torres.

In managing the contributions of the 5,000-strong government work force for the last 20 years, NMIRF spends at least $3.2 million every month. Of this, some $2.7 million goes to pensions of government employees while the rest are spent on salaries and administrative expenses.