Fund unhappy with new retirement bill

The NMI Retirement Fund expressed dismay over a newly introduced bill at the House of Representatives that it said aims to “reverse” the program.

Fund administrator Karl T. Reyes said House Bill 15-116, which would amend the Retirement Fund Act, would restore everything that has been put aside or cancelled, such as education and military credits.

“It’s going back to the old system. It’s going to reverse all the things that have been removed already—education credit, military service, salaries,” said Reyes.

He said going this route would mean more expense for the government.

The CNMI government’s retirement system has been described as “too generous.”

Earlier, the Fund said that the government would be able to save up to $40 million from the implementation of Public Law 13-60 or the Retirement Integrity Assurance Act.

Reyes said that, based on an actuarial study, the government would save $4 million by stopping the vesting of education and military credits alone.

The law provides that it would stop vesting credits for education service effective 2003. Besides education, the new law also stops vesting military credits. It also stops vesting credits for compensatory time, used sick leave, and prior service.

Further, the law merges Class I and Class II retirement categories to ensure uniform rate, discourages early withdrawal of contributions, repeals the 3-percent bonus for certain elected officials and benefits for boards and commission members.

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.

These changes are believed to reduce government payroll costs and free up additional funds for remittance as employer contribution to the Retirement Fund.

Currently, the government is required to shoulder 36.7 percent of employees’ retirement contribution. But for lack of funding, government offices could only remit 24 percent.

Meantime, H.B. 15-116, introduced by House Speaker Oscar M. Babauta and eight other House leadership members, said that “the blanket repeal of a number of code provisions in section 3 of P.L. 13-60 is not in the best interest of members at this time.”

The bill seeks to include “vesting credit for education and military service” among others.