Penalty sought for Finance chief’s failure to remit Fund contributions

Another lawmaker has introduced a bill that would impose a penalty for failure to remit money into the Retirement Fund.

Under House Bill 16-239, the Finance Secretary would be held personally liable for failure to remit the 11 percent rate to the Retirement Fund.

“The Legislature finds that P.L. 16-32 amended P.L. 15- 126 and in doing so, reduced the employer contribution to 11 (percent) from 18 (percent). This amendment however, did not include a requirement that the Secretary of Finance actually remit the amount contributed by the employer to the Retirement Fund. Although this remittance is implied, the instant amendment is necessary to ensure that the Secretary is expressly required by operation of law to remit the 11 (percent) employer contribution,” the bill stated.

The bill, authored by Vice-Speaker Joseph Deleon Guerrero, forces the Finance Secretary to pay any and all amounts due to the Retirement Fund that are not remitted. In addition to the principal, the penalty for not making the required contributed amounts on time is payment of the principal with interest at a rate of 33 percent.

If passed, the law would be retroactive to Oct. 1, 2008.

Rep. Ray N. Yumul, chairman of the NMI Retirement Fund Working Group, introduced House Bill 16-236, which would make any person who fails to pay or remit contributions to the Fund guilty of a misdemeanor, and upon conviction may be fined not more than $2,000 and imprisoned for not more than a year.

“Any government employee shall have a cause of action against the Secretary of Finance or head of each autonomous agency or public corporation for the failure to remit the employer’s contribution and recovery of any unpaid employer contribution,” the bill stated.

Yumul, who is also chair of the House Ways and Means Committee, said the government’s failure to remit its employer contributions to the Fund created a financial dilemma that resulted in the Fund liquidating its assets to pay retirees their pensions.

The Fund’s investment portfolio has since decreased due to the liquidation of assets and investment market decline.

Introduced on March 30, H.B. 16-236 states that the Fund’s total assets are only at $267 million, which is much less than its all-time high of $540 million a few years ago.

The government has repeatedly failed to remit its employer contributions as required by law.

“The purpose of this legislation is to establish a criminal penalty and cause of action against a person charged with the responsibility of remitting employer contributions to the Fund but fails to make such remittance, and to require the secretary of Finance and heads of autonomous agencies and public corporations to notify government employees in writing of any unpaid employer contribution each quarter,” Yumul said in his bill.

As of March 31, the CNMI government owes the Fund over $196 million in employer contributions.

Under Yumul’s bill, the Finance Secretary and heads of autonomous agencies and public corporations shall remit their employer’s contribution concurrently with the employee’s contribution within five working days following the end of each payroll date.

They are also required to notify employees in writing of the balance of their unpaid employer contribution, if any, each quarter.

Retirees want the government to pay its estimated $6 million monthly employer contribution to the Fund, fearing the pension system would go broke in just a few years if it doesn’t get payments due it.

The Commonwealth Association of Retired Persons and the NMI Retirement Fund administration and board of trustees share the same concern about the pension system’s financial health.