PSS survey: 70 pct. of public school employees want DC plan

Employees and personnel of CNMI public schools want to transfer to the NMI Retirement Fund’s defined contribution plan in order to save their monies from total collapse, according to a recent survey conducted by the Public School System.

The survey revealed that 70 percent of personnel want to move away from the defined benefit plan.

PSS federal programs officer Tim Thornburgh said the system has over 1,000 employees, including federally funded personnel. Of that number, 48 percent are already under the defined contribution plan.

Membership in the defined benefit plan became mandatory for all employers of the government, autonomous agencies, and corporations if there were hired before Jan. 1, 2007. The defined contribution plan, meantime, is a multi-employer pension plan and is the single retirement program for all new employees whose employment began on or after Jan. 1, 2007.

“We’re seeing a strong desire from our employees that they want to move away or transfer from the DB plan to the DC plan. Their reason, according to our survey, is because of the disappointing situation of the Fund at present,” said Thornburgh.

He noted that there is also a small group of employees who are undecided and need more information to make a decision.

PSS has already communicated with the Fund for assistance on the steps that PSS employees must take to transfer to the DC plan.

Thornburgh pointed out that employees with less than 16 years of service can switch from the DB plan to the DC plan anytime by refunding their contributions plus 3 percent interest. In a matter of weeks, he said, these employees can be accepted into the DC plan.

Thornburgh also disclosed that PSS is assured of stable pool of employees in the next three years because only 4 percent of the workforce is thinking of retiring from PSS per year. This, he said, is way lower than the national average of 8 percent annually.

Among all public schools, he said that only Sinapalo Elementary School has a high number of those wanting to retire within the next three years—55 percent of the school’s employees and all classroom teachers.

PSS financial consultant Ed Tenorio said that transferring employees to the DC plan will help save PSS in contribution expenses. He said under the DB plan, the mandatory contribution cost for employers is 60 percent beginning Oct. 1, 2011, compared to the DC plan, with only 4 percent employer contribution.