Fund to sue NMI govt

The NMI Retirement Fund has decided to finally file legal action against the government for failing to pay off its employer contributions, now amounting to $85 million.

Fund board chair Joseph Reyes said that the matter was discussed during the board meeting held Thursday last week.

“The board adopted to bring [the issue] to court for whatever resolution that’s appropriate. I have been authorized to pursue this,” said Reyes in an interview.

He said the Fund will go after the Executive Branch, particularly the Department of Finance, and possibly the Legislature for possible liability in connection with the government’s severe lack of funding.

“The defendant will probably not just be one. If we’re going to do it, we’d do it right. We’ll look at the Legislature, laws in place, [and] appropriations,” he said, citing that a law entitling the Fund to receive proceeds from hotel occupancy tax was never remitted to the Fund.

He said the Fund can now focus on the matter since it just hired a new legal counsel.

The board approved to sue the government early on but the matter kept getting sidetracked due to the lack of an attorney, among others. The Fund has been without its own attorney since over a year ago.

Reyes said a lawsuit against the government would be done “anytime.”

He said the board is mindful of costs, citing that “part of our fiduciary responsibility is containment of cost.” But he said that without legal action, there is no way that the Fund could force the government to pay its debts.

The Fund said that Finance has to pay $1.4 million per payday but the department has promised to remit only $850,000.

The government’s payment agreement with the agency earlier called for some $500,000 payment every pay period. This was increased to $850,000 beginning 2002.

Meantime, the Fund said that in the past five or six pay periods, Finance has failed to give the exact amount.

In the past weeks, it only managed to remit a total of $600,000.

Last week, Finance said that it would pay the Fund $850,000 this week to help pay off the pension checks this week.

Fund officials earlier expressed concerns against the possible failure to release pension checks this week due to the lack of government remittances.

Reyes said the Fund faces a $1.4 million shortage for pension funds.

Meanwhile, the $85 million arrears reflect the central government’s unpaid employer contributions from December 2001 to the present.

The Fund said that, although the administration paid its contributions, these were credited to the oldest accounts covering fiscal years 1998 to 2001. The Fund said that the government ceased payments altogether from August 1999 until September 2001.

The Fund said that total employer contributions paid from October 2001 to September 2005 amounted to $56.3 million.

The government is required to shoulder 24 percent of retirement contribution for about 5,000 employees.

The 24 percent rate was raised by the Fund to 36.7 percent effective October this year in view of the government’s huge debt.