End of your retirement pension, Fund’s defined benefit plan

If you are retired, a surviving spouse, or a government employee planning on retiring in a few years you might want to attend the presentation of a meeting planned for Friday—assuming the Legislature doesn’t change the date unannounced to keep interested retirees from hearing the bad news.

There was an article that should be of great interest to all members of the Fund in the April 21 issue of this paper. The subject concerned a report on the continuing deteriorating condition of the Fund’s benefit plan.

The briefing is scheduled for presentation to the Legislature at 10:30am, Friday, April 25, in the House chamber when the Fund’s actuary, Buck Consultants, will address the rapid diminishment of the Fund’s financial solvency, and thus the future of the member’s pensions.

Of the several possibilities the consultant is expected to present based on projections resulting from the central government’s suspension of its legally mandated contributions, the one possibility that caught my eye which would shorten the Fund’s lifetime was based on the current government’s continued failure to meet is contractual obligation under the plan—and all contributions stopping entirely. This has already been happening, particularly the continued failure of the government to make its employer’s contribution to the Fund, with the severe result being the real possibility under the worst case scenario that the Fund could be broke in about eight years—or by the year 2016. How old will you be eight years from now?

This is a short time away—as the year 2016 is as close to us as the year 2000 is distant in the past. Do you remember watching the 21st century ushered in and the New Year celebrations on television as 1999 gave way to 2000? That’s how close eight years in the past is to this year of 2008 and how close this year is to 2016 in the future. Time flies and, before you know it, the future becomes the past.

Of course, if you are rich and not concerned about your financial future as a retiree, then no need to attend the briefing.

However, as difficult as things are with NMI’s economy at the present, if you are a retiree at least you still have some income and things can’t be as bad as it is for some folks. But you should consider that during these times you had best plan for the worst—as that time might be closer than you think.

If past examples are any indication, in my judgment the central government will not do anything to protect those retirees now in the so-called “defined benefit plan.” Considering past experience with CUC; the failure to deliver reliable potable water; inadequate hospital facilities, and on and on—if these are the examples for all to see and consider as the measure—look out, don’t be surprised when your pension dries up. If the government doesn’t have enough money to buy fuel oil for its generators it certainly isn’t going to be able to step in and pay your pension if the Fund dries up.

Face it. The only money which could be available to pay pensions is that which is earned from the Fund’s investment portfolio and that is rapidly being used up to make up for the shortfall payments the government is not making. That’s the long and the short of it. Don’t expect Uncle Sam to bail out the Fund. Your mother may love you but the U.S. government does not.

Of the several retirement fund scenarios which will be provided by Buck Consultants regarding the future solvency of the Fund, in my judgment the eight-year time span is the most likely result if past experience with the central government can be used as the measure—and I believe it should. But don’t take my word for it; ask a member of the board of trustees.

The new defined contribution plan which replaced the former defined benefit plan at the beginning of the year is no government retirement plan to brag about unless you think the government’s contribution of 4 cents on every dollar an employee saves is significant. I don’t, since it won’t even compensate for inflation. The new plan amounts to nothing more than each individual’s separate and independent savings account. You don’t really need the government’s scant pittance of 4 cents on the dollar to start such a program for yourself. Has the central government and the Legislature in particular become so accustomed to cheap foreign labor that they want to apply low wages and no benefits to their government employees? Ask your representative about that.

To be continued. Next: Measuring your life expectancy against your pension and the status of the Fund’s lawsuit.