Open letter concerning the Retirement Fund

I refer to the article in the Dec. 23 edition of the Saipan Tribune titled: “In Case The Retirement Fund Goes Bankrupt” in which you were quoted regarding several points concerning the condition of the Fund. Assuming you have been quoted accurately, I know I can speak for all retirees who agree with me that your concern over the deteriorating condition of the Fund’s remaining financial base is very much appreciated.

Your professed search for a solution and willingness to work with Fund trustees is refreshing and a welcome step in the right direction. I note that several legislators have indicated their belief that the solution to keeping the Fund solvent is through revenue bond financing. Under normal conditions—during normal times—this approach may have indeed been possible but in my judgment, and in consideration of the realities of the current situation with the economies of the United States and that of the world, I do not think it is realistic to believe that such bond financing for the NMI is viable within the foreseeable future for this particular purpose.

My reason for holding such an opinion is the CNMI’s poor credit reputation. This is in part a result of the neglect of the government’s legal contractual responsibilities of both past and present government administrations and the impact this has had on the government’s reputation as a credit risk. I can’t imagine who would want to purchase NMI government bonds at this time. But don’t take my word for it—check it out with some of the well know bond rating agencies or the Fund’s own contacts in the financial market.

I expressed my opinion on this matter in detail two months ago in an article in the Tribune on Oct. 24 titled: “What’s the Possibility of Bond Financing for the Fund?” This article can be accessed through the Tribune’s online archives.

As far as the economy of the United States and the world is concerned we are quite close to an almost total paralysis within which few are likely to be immune. The inter-bank (lending) market is not functioning and banks are not lending. This is generating vicious cycles. Consumers are not consuming, businesses are not taking on additional workers, investors are not investing. The NMI is not alone in this bleak process.

That’s why I believe it is essential to develop a contingency plan NOW.

I urge you to communicate with your counterparts in every state senate in the United States to convene a meeting to discuss methods to cushion the adverse impact of a near nationwide potential “pension meltdown”—perhaps with federal intervention. With all the respective state senate presidents there is strength in numbers, something the retirees will no doubt soon realize.

Meanwhile senator, talk about floating a revenue bond to bail out the central government from the situation it created by not meeting its previous financial obligations to the Fund and its loyal retirees is just that—”talk.” To continue to hold out the possibility of such relief creates false hope among those dependent upon their pensions for their livelihood. I suggest you and others in the Legislature look elsewhere for a solution.