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34-percent drop in Fund assets
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Posted on Mar 02 2009
The NMI Retirement Fund’s total assets, which include investments and loans, dropped by 34 percent or from around $514 million in Fiscal Year 2007 to about $340 million as of yesterday, according to Fund administrator Mark Aguon.
“The global economic crunch represented about 60 percent in the total drop in assets, while the government’s non-payment of employer contribution contributed 40 percent in the drop in assets,” Aguon said yesterday.
At the same time, members of the Retirement Fund board of trustees re-elected the current officers to another term led by chair Juan T. Guerrero and vice chair Pedro Dela Cruz during Friday’s board meeting on Rota.
The meeting will be reconvened on March 10 on Saipan.
The $340 million in total assets as of yesterday brings to $879 million the Fund’s total liability.
Unfunded liability is at $539 million, which is 61 percent of the Retirement Fund’s total liability.
Investments alone dropped by 34 percent, from about $468 million to $308 million as of yesterday, Aguon said.
“We took a big hit from the global economic crunch. We also have a drawdown of a little over $20 million in the last four months or an average of about $5 million a month,” said Aguon.
This brings to some $120 million the Fund’s total drawdown to fund the benefits of the government’s pension plan.
Board chair Guerrero earlier said the “main threat to the Fund’s investments now is the constant drawdowns to fund pension cost.”
He added that the CNMI pension program may be wiped out in five years or as early as three years due to the government’s unpaid obligation and the impact of the global economic crisis on the NMI Retirement Fund’s investment portfolio.
For FYs 2006 and 2007, a law legalized the suspension of payments to the Fund. Although the suspension was lifted in FY 2008, the government is still delinquent in its payments.
Government contributions are to fund current operations, pension and other benefit costs, as well as to service the long-term actuarially accrued liability.
