30 percent retirement bonus may have to go

Government employees stand to lose the 30 percent bonus under an early retirement program by next week if Gov. Pedro P. Tenorio finally signs into law a bill that the Senate passed in a recent session after holding off action for nearly a year.

Proponents of the legislation said elimination of such retirement benefit will comply with the ongoing austerity measures and stave off potential drain of the NMI Retirement Fund’s resources.

But senators, in voting 6-0 in favor of House Bill 11-359 during Tuesday’s session, wanted assurances that current eligible recipients will not be denied the bonus once it becomes a law.

They also sought safeguards from the Retirement Fund that the benefit will be factored into their pension pay since the proposal is drafted to ensure that civil service employees who retire before Dec. 15 this year are not affected.

The bill, sponsored by Rep. Heinz S. Hofschneider, will repeal the Commonwealth Early Retirement Bonus Act of 1993 on that date even when the governor signs it afterwards.

Passed by the lower house last January, the measure was referred to the Senate Committee on Judiciary and Governmental Operations for review, but Sen. Juan P. Tenorio asked his colleagues to vote on it in order to protect NMIRF assets.

“We have to face the music and do something right. It’s not something easy to do, but we have to look into the entire picture,” he said.

Sen. David M. Cing echoed his concerns, saying that the Retirement Fund “will go broke if we allow the law to continue as it is now.”

Impact on NMIRF

NMIRF Administrator Juan S. Torres, speaking during the Senate session, stressed the significance of the legislation in strengthening their financial conditions.

He noted that once the bonus is given, it becomes part of the benefits and entitlement of a retiree even if the government does not pay a single penny for its contribution to the Fund.

“If we continue to give out these bonuses, over the long haul we will have no retirement fund to pay,” he told senators.

Mr. Torres added too that while the law is intended to encourage early retirement and bring down the number of employees in the public sector, it has been a failure since the government immediately seek replacement for the posts vacated by retirees.

The bonus equivalent to 30 percent of their annual salary used to be paid off in lump sum upon retirement of a civil service employee after 20 years, but the financial difficulties confronting the government have delayed release of the money.

Last year, finance officials proposed to the Legislature the repeal of the law in a bid to cut down on administration’s expenses and as part of slew of drastic measures aimed at lessening its financial obligations to nearly 5,000 government employees.

Complaints from retirees have mounted in recent years over their non-receipt of the bonus on time and denial of their retirement benefits as it is not computed as part of their monthly pension pay.

Senate President Paul A. Manglona made a strong point during the session when he mentioned that while they are ready to support the proposal, there are no statistics to back up its intention or underline its impact on the local coffers.

Although HB 11-359 guarantees that those who retire before the expiration will receive the bonus and that it will be factored into their pension, it will stop the practice of inflating the amount of actual retirement benefits.

“I join the Retirement Fund in asking for the repeal, but I want to make sure that those who are entitled will not be denied if this bill is passed,” said Senate Floor Leader Pete P. Reyes.