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COLA, annual retirement bonus now up to board
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Posted on Jun 28 2011
The cost-of-living-allowance and annual retirement bonus of members would now be based on the Retirement Fund’s level of funding and will be subject to the board of trustees’ approval.
The board adopted the new regulation at its Friday meeting on Rota.
Fund administrator Richard Villagomez, in an email to Saipan Tribune, said the amended regulation was necessary to conform with the new law enacted by Gov. Benigno R. Fitial in February.
Public Law 17-32 amended 1 CMC 8358 to “allow the Fund board to vote to provide a non-compounding annual retirement bonus in lieu of a cost of living increase to help provide for the fiscal solvency of the NMI Retirement Fund.”
Based on the new regulation, Class I and Class II retirees and surviving spouses who receive retirement or disability annuity from the Fund may have their annuity adjusted for COLA as determined by the board. In previous regulations, this benefit was mandatory for eligible members.
“The COLA rate shall be set by the board each year using as a guideline the rate used by the U.S. Social Security System for its beneficiaries and shall be applied to the first $30,000 of each beneficiary’s annuity amount,” the new regulation states, adding that once the board adopts the COLA rate, it will be the same rate applied throughout the calendar year.
The new regulation also allows the board to provide an annual retirement bonus instead of COLA, provided it gets a two-third vote of board members.
However, any decision to grant an ARB instead of a COLA shall be based on the funding level of Fund.
Saipan Tribune learned that the new regulation, along with the enactment of P.L. 17-32, eliminated the compounding effect of COLA and will reduce the Fund’s unfunded liability by $84 million. It also stops the payment of monthly COLA to eligible members, which will amount to $33,745 in monthly payments for the remainder of the current fiscal year 2011.
