$109M savings eyed once Fund omnibus bill becomes law

At least $109 million in savings are expected to help prolong the life span of the NMI Retirement Fund once the yet-to-be-filed omnibus bill to help the pension system becomes law.

Rep. Ray N. Yumul, chair of the NMIRF Working Group, said the omnibus bill reforms certain provisions of the current Retirement Fund laws, including a reduction in its long-term expenditures, improving actuarial stability, providing for consistency in board policy direction, and limiting its long-term liability.

The omnibus bill also aims to cut costs and restrict member withdrawals, reallocate the health and life insurance programs post-privatization, and reduce health insurance subsidy for highly-paid retirees.

Yumul earlier expected to introduce the bill during yesterday’s session, but he said the bill was still under review by other members of the NMIRF Working Group.

Fund administrator Mark A. Aguon separately confirmed that his office’s review of the bill showed potential savings of about $109 million once the bill becomes law, including $84 million from suspending the cost of living allowance.

Yumul said there’s roughly $5 million in savings from reducing health insurance subsidy, and another $5 million from streamlining disability benefits.

Aguon said the $109 million in savings will reduce the Retirement Fund’s unfunded liability now at over $549 million.

Yumul said the bill will affect future retirees, and not the ones who are currently receiving retirement benefits.

“But these are only projections,” said Yumul, who is also chair of the House Ways and Means Committee. “The bill is still subject to public hearings and we expect additional input.”

Another feature of the bill is referred to as “bad boy legislation” in which members who are convicted of a felony are either not eligible to receive their retirement benefits or their benefits will be reduced to the lowest rate.

“Again, this feature is open to discussion,” said Yumul, adding that the bill also proposes changes to the qualification and composition of the board of trustees, a reduction in occupational disability benefit from 50 percent to 30 percent of the member’s salary at the time of the disability, set annuities to not more than $70,000 a year, suspension of cost of living allowance, and reporting of federal funded employees in the first quarter of every year.

Yumul said the whole idea is to slow down the bleeding of the Retirement Fund.

During its first few meetings, the NMIRF Working Group said the piecemeal measures that were incorporated in the omnibus bill were the issuance of pension obligation bonds to help stabilize the Fund’s financial health, shielding the Fund from political tampering, prohibiting the Legislature from increasing benefits until all obligations of the Fund have been fully paid; limiting the class of people able to double dip; allowing the Fund to file for bankruptcy; and ceasing all disability benefits and a soft freeze on benefits accrual at 20 years.

The working group currently has 14 members led by chair Yumul, and six technical, statistics and legal support staff.

Rumor

Yesterday afternoon, a rumor circulated on Capital Hill saying that Gov. Benigno R. Fitial has issued an executive order putting the NMI Retirement Fund directly under the Office of the Governor.

Members of the Senate and House, including Senate Pres. Pete Reyes and House Speaker Arnold Palacios, said they also heard about this but didn’t see a copy of the executive order.

In the end, Fitial himself said in a text message that he didn’t issue such an executive order.

The governor is expected to meet this morning with lawmakers about Retirement Fund issues.