‘A victory for NMI retirees’

The lawyer of CNMI retirees who filed a lawsuit against the NMI Retirement Fund board and its former investment consultant, Merrill Lynch, welcomed the decision issued by the court Friday that denied the temporary restraining order filed by the pension program on the implementation of beneficiaries derivative act.

This is the case where the Fund asked the court to enjoin the implementation of P.L. 17-51 arguing that it unconstitutionally interfered with the Retirement Fund’s contracts. P.L. 17-51 is designed to allow retirees to take legal action on behalf of the Fund, and in the name of the Fund, at no expense to the Fund when the Fund’s board refuses to act.

Attorney Bob O’Connor, of O’Connor Bermn Dotts & Banes, described associate judge Kenneth Govendo’s ruling as a victory for retirees.

“I can say this is a victory for CNMI retirees and we are very pleased. Judge Govendo ruled that P.L. 17-51 actually increases the rights and remedies available to the Fund and beneficiaries, exactly as we have always maintained. He also held that the Fund suffered no harm from the enactment of P.L. 17-51 which he held was constitutional and does not interfere with existing contracts,” O’Connor told Saipan Tribune.

The Fund, upon signing into law of the beneficiaries’ derivative act on Sept. 5, asked the court to stop its enforcement citing the law was unconstitutional and will bring more chaos to the already dying pension plan.

To date, the Fund has received six notices of termination of contracts from its service providers including its new investment consultant Wilshire Associates, actuarial adviser Buck Consultants, and four other money managers. Friday was the effective date of Wilshire’s termination of its contract. It earlier disclosed that a TRO or a repeal of the law could only convince it to stay and serve the Fund.

According to O’Connor, the law is obviously in the public interest and the interest of the Commonwealth’s retirees and the decision serves as a message to the program’s administrator.

“This decision is a message to the Retirement Fund: you should start acting in the best interests of its retirees for a change.”

He said that while the Fund Board had argued this law interfered with its contracts, he said the court found that the law only had “temporary” and “incidental” effects on their contracts and the climate the board operates in.

“The board claimed this law would make it more difficult for it to find a money manager, but the court saw through that when it noted the Fund had made absolutely no attempts to find a new money manager,” he said, adding that he can find them 10 reputable money managers next week if the Fund asks him to.

The Retirement Fund, he said, should never have opposed this act in the Legislature or in the courts. “It makes you wonder what they are hiding. Why would the trustees of the Fund be fearful of retirees being able to bring actions on behalf of the Fund, with no expense to the Fund? Their opposition to the act and their attacks in court against it has never made any sense, to paraphrase a former U.S. senator, the Fund’s position on this law is the most unheard of thing I have ever heard of,” added the lawyer.