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Employee contribution to NMIRF to increase Oct. 1
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Posted on Sep 14 2008
Government workers can expect a larger deduction from their paychecks beginning next month, as their share of pension contribution goes up.
The NMI Retirement Fund has announced that beginning Oct. 1, 2008, the employee contribution rate for the defined benefit plan will increase to 8.5 percent for Class I members and 11 percent for Class II members.
Currently, Class I members of the defined benefit plan pay 7.5 percent of their salary to the Retirement Fund. Class II members pay 10 percent.
The increase comes according to a law Gov. Benigno R. Fitial signed last year. Under the law, the rate for Class I members will continue to increase by one percent a year until it reaches 10.5 percent in fiscal year 2011. The rate for Class II members will remain at 11 percent.
Each year, an actuarial valuation study is commissioned to determine the new pension contribution rates. The new rate that the government is supposed to pay has yet to be announced.
For the current fiscal year, the actuarially recommended employer share is 36.77 percent of an employee’s salary. However, the government has not paid the full rate since 2006. Instead, legislation has been passed to reduce the government contribution to as low as 11 percent.
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.
Because of the government’s pension debt, the NMI Retirement Fund has stopped processing new applications for retirement. As a result, government employees who have paid their share and who are due for retirement cannot retire.
