Previous Story
100 percent rebate for retirement pension opposed
|
Posted on May 16 2000
Northern Mariana Islands Retirement Fund Administrator Juan S. Torres has cautioned the Legislature against the passage of a proposed measure that will subject retirement pensions to a 100 percent tax rebate.
Mr. Torres has asked Rep. Antonio M. Camacho, chair of the Committee on Ways and Means Committee, to consider the impact of HB 12-043 on the CNMI coffers in view of declining government revenues.
While the Fund has no real objection over the passage of the proposed measure since it will increase the retirees’ disposable income, Mr. Torres recommended that the Legislature consider applying a graduated rate depending on the size of pension amount instead of rebating the same percentage across the board regardless of annuity level.
Based on current statistics, total refund is estimated at $2.5 million per year.
The government is currently having difficulty paying out rebates to people because of shrinking government resources.
In fact, the government has been running under continuing resolution reflecting the $216 million spending limit of FY 99 since October 1 in the absence of the approved budget.
The Legislature recently passed the $211 million proposed budget for FY 2000, which represents a two percent decline from the previous year’s spending package of $216 million.
Since the regional crisis hit the island, the government has seen a decline in tourist arrivals, making it difficult for the Tenorio administration to get back its lost market share.
Concerned about the financial integrity of the Fund, Mr. Torres has also asked the Judicial and Governmental Relations Committee to defer action on five measures pending in the House due to its serious implication on the cash position of the agency.
The CNMI government owes the Fund $32 million in unremitted employer’s contribution for the last 20 months; $6 million unpaid “earmarked appropriation” for Fiscal Years 1998, 1999 and 2000; and $3.5 million in unreimbursed 30 percent bonus payment the Fund has paid on behalf of the central government since 1993.
Although the Fund’s investment has been showing steady increase, the gains are subject to high volatility of the stock/bond market.
