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Bill seeks proportionate pension for retirees
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Posted on Jun 27 2008
The NMI Retirement Fund will be able to pay retirees only a portion of their pension under a bill to be introduced in the Senate today.
Currently, Retirement Fund members that are due for retirement cannot retire. The pension program has stopped processing applications because the government is not paying contributions.
The bill, which Sen. Victor Hocog is expected to file today, would allow the pension agency to pay members retirement benefits that are proportionate to what the government has contributed.
Thus, if the government has paid only 80 percent for a member, he or she will get only that much in benefits. The rest of the pension will be paid at a later time, when the government makes full contribution to the program.
The bill would also allow the Fund, on a case-by-case basis, to retire individual members if their employing agency makes a full payment for them, or if the Legislature appropriates the money.
The Retirement Fund had previously proposed the proportionate pension scheme. But this plan was stopped when the Legislature passed a law making it illegal for the Fund to pay less than the full benefits to retirees.
The Legislature said the proposed scheme was unconstitutional. The NMI Constitution, the lawmakers noted, “provides that membership in the Commonwealth retirement system is a contractual relationship and accrued benefits shall neither be diminished or impaired.”
The CNMI government has stopped remitting employer contributions to the Fund since March 2006. Prior to that, the government had been paying only part of its contributions.
According to the Retirement Fund, as of Sept. 30, 2007, the CNMI government owed the pension program $132 million in employer contributions, excluding penalties and interest.
