Previous Story
‘Defined contribution an option for NMI’
|
Posted on Nov 08 2005
Offering a defined contribution plan may be good to allow NMI Retirement Fund members an option to directly manage their own contributions, according to Pacific Region Investment Conference vice chair and NMI Fund investment director Mark Aguon.
“What I find very interesting for us here is the defined contribution plan because it gives you access to your money,” said Aguon in an interview during the 5th annual conference of the association held at Hyatt Regency on Saipan Friday.
Right now, the NMI Fund offers the defined benefit plan, which defines the members’ benefits throughout life and gives the Fund the responsibility to manage the funds.
“But this creates unfunded liability like what we have right now. With defined contribution, there’s zero unfunded liability because you only match what the members contribute,” he said.
There are people, he said, who would opt to manage their own money, but some may still trust the Fund to handle the funds.
In case of conversion to defined contribution plan, Aguon said that the NMI Fund would have to provide needed education programs for the members.
“We’ll have to educate them,” he said.
The NMI Fund currently has $526 million in unfunded liability. This refers to financial obligations to members that cannot be met if they claim their benefits right now.
The Fund has some 8,000 members, including 2,000 retirees.
At present, the Fund requires the government to pay 36.7 percent in employer contribution.
The Fund said its total assets stand at $534 million, which includes both local and international investments. The Fund is mandated to have at least $1 billion in total assets by 2020.
Founded in 1980, the Fund said it managed to raise its total investments from $3 million to $445.3 million in a 25-year span.
As part of its investment strategy, it currently allocates some 4.4 percent or nearly $20 million in the local market, including housing loans for its members.
