Babauta wants waiver of employees from retirement regs

Gov. Juan N. Babauta has asked the NMI Retirement Fund to exempt certain employees from the proposed retirement regulations that aim to stop granting education credits to employees who are without a degree when the law was passed in 2003.

Fund administrator Karl T. Reyes said that Babauta earlier asked the Fund to exempt those employees who were enrolled in college when the law was enacted.

“The governor’s request entails that these people when they were working in the last five years, they knew that if they get a degree, they’d be given credit. Now that the law is passed, we stopped it before even they get their degree,” said Reyes.

He said there are about four or five people that are affected by the law.

These people were enrolled at Northern Marianas College during the passage of the law.

“But some are not finished yet,” said Reyes.

He said that Public Law 13-60, which was passed in December 2003, provides that “if you don’t have a degree at that time (2003), we can’t give you two years or four years of education credit.”

In the meantime, the Fund has only completed the rules and regulations on P.L. 13-60 this month, or two years following its passage.

“It took us two years to finish the regulations because it’s a meticulous process,” said Reyes.

He said it is up to the Fund board to grant a waiver of education credit removal for certain government employees.

The board was expected to act on the governor’s request during its meeting yesterday afternoon.

“It’s up to the board to decide whether to waive that or not,” said Reyes.

The Retirement Integrity Assurance Act or P.L. 13-60 aims to remove unfunded liabilities in the government’s retirement program and enhance its financial solvency and viability.

The Fund’s total unfunded liabilities total $526 million this year.

Meantime, the law merges Class I and Class II retirement categories; discourages early withdrawal of contributions; and adopts the U.S. Social Security System’s cost of living allowance model, among others.

To maintain financial integrity, the law repealed the 3-percent bonus for certain elected officials, benefits for boards and commission members, vesting credits for education service, military service, compensatory time, and used sick leave, and prior service vesting credit.

The law imposes penalties on early withdrawal of contributions and restricts reemployment for a period of six months unless the contributions are returned to the Fund.

Further, the law calls for the restructuring of the early retirement provision for Class I members to encourage them to retire before reaching 62 years.

Government authorities believe that these changes would reduce government payroll costs and free up additional funds for remittance as employer contribution to the Retirement Fund.

Among others, the law prohibits anyone who has resigned from the government to get back sooner than six months after resigning.