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New law modernizes Fund investment statute
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Posted on Jun 19 2011
Gov. Benigno R. Fitial signed into law on Thursday a bill that would modernize the NMI Retirement Fund investment law, including allowing the pension system more diversity in its stock investments by removing the restrictions to only U.S. stocks to reduce the risk of loss.
Statutory provisions relating to the Retirement Fund’s investments have not been updated since the agency was established by law in 1980.
House Bill 17-174, introduced by floor leader George Camacho (Ind-Saipan), is now Public Law 17-46.
Camacho, in his bill, said current provisions do not do not reflect modern portfolio theory and recommended asset allocations that experts consider as prudent for many public pension funds.
When asked for comment yesterday, Camacho said he thanked the governor for quickly signing his bill into law, and the House and Senate for passing it.
“It’s an important bill that will assist the Fund in its continuing efforts in protecting its members. With this new law, the Fund now will have a much broader field and more choices to invest in, giving the chance for a much greater return in its investments,” Camacho told Saipan Tribune.
Currently, the Retirement is only permitted to invest in socks of corporations that were created or exist under the CNMI or U.S. laws. There is no requirement that these stocks be publicly traded.
Besides removing restriction to only U.S. stocks, the new law also broadens the definition of bonds and “other securities,” which currently is only 15 percent of the total value of the Fund’s investments. The new law increases the value of “other securities” to a maximum of 25 percent of the value of the pension system’s investments.
