Fund unclear about PSS uncertainty on rate hike

NMI Retirement Fund administrator Karl T. Reyes said yesterday that he is unclear about the Public School System’s claim of getting “mixed signals” about retirement contribution.

“For one, I never met with the [PSS] finance officer,” said Reyes, in reaction to recent reports indicating that he had told PSS finance officer Richard Waldo that the agency needed only to pay 24 percent.

The Fund had raised the government’s employer contribution rate from 24 percent to 36.7 percent effective fiscal year 2006, which began this month.

The PSS had opposed this and petitioned the Fund to keep its rate at 24 percent. The Fund had denied the PSS request, saying that doing so would be unfair and discriminatory.

Last week, Reyes said that PSS had paid at 24 percent, thus failing to comply with the new regulation.

Three other agencies, including Northern Marianas College and the financially distressed Commonwealth Utilities Corp. had paid at 36.7 percent.

PSS complained lately that it is getting “mixed signals” from the Fund on the contribution rate.

PSS cited that after raising the rate to 36.7 percent, the Fund is now pushing for a $200 million bond, which would result in a 21 percent contribution rate.

PSS also alleged that the Fund had told Finance director Richard Waldo that it only had to pay 24 percent.

“I don’t understand why they’re saying ‘mixed’ signals. Perhaps they’re getting mixed signals from a different Retirement Fund, not from here,” he said.

On the issue of the $200 million bond, Reyes said that it is only a plan that the Fund aims to propose to the Legislature next year. He said that such approach would cut the government’s unfunded liability with the Fund, which is now up at $526 million.

If the $200 million bond is pursued, he said that the Fund could lower the contribution rate to 21 percent. Until then, he said that the rate is at 36.7 percent.

He said that if more agencies would not be able to pay at the new rate, then it would naturally boost the Fund’s lobbying for the $200 million bond since it reflects the government’s inability to arrest the increasing unfunded liability.

PSS, for its part, has argued that it should not be obliged to pay at an increased rate since it has been paying its share on time, unlike the central government.