Fund emergency rules on refunds take effect

Refund applications from members who are not completely separated from the NMI Retirement Fund will no longer be approved by the board effective this month, after the emergency adoption of changes to Fund regulations relating to refunds and re-employments.

In a memorandum to all department and activity heads, Fund administrator Richard Villagomez said that the old policy on refunds was based on a “flawed interpretation and understanding” of the right to continued employment and the interaction between this flawed interpretation and certain property rights that attach to pension benefits.
Under the emergency regulation, he explained that a person who quits and submits an application for refund is still considered a member until all their contribution has been refunded.

He also explained that upon termination of employment of an active member, the law allows Class I members to refund if years of service is below 15 years while for Class II members, if the years of service is less than 20 years.

“If a member is re-employed prior to complete separation, their refund application will be denied in accordance with the law and they will remain the same class of member of the Fund,” Villagomez explained.

Additionally, the new regulation states that there is an absolute six-month prohibition on re-employment following complete separation. Regardless of class membership, a member shall be restricted from government re-employment for a period of six months after receiving a refund of his or her contributions.

According to Villagomez, it is improper for any government branch, department, or agency to re-employ any former defined benefit plan member for six months after complete separation because there is no property interest in future employment with the government. The emergency regulation will apply to all Fund members.

Board chair Sixto Igisomar told Saipan Tribune yesterday that the board gave the administrator and his team the authority to revisit all Fund rules and regulations to check if there is a need to update or clarify some sections.

Igisomar said that more policies are being reviewed for board action.

In a meeting early this month, the board uncovered potential illegal termination and hiring practices in some government agencies in a bid to lower their employer contributions. This has been referred to the Office of the Attorney General for further investigation.

Igisomar said, however, that the new emergency regulation on refunds and re-employment is not directly related to these discoveries.

“No. I would not credit that action as a result of that matter. It’s not directly related. It is the intention of the board and management to make all our regulations and policies user-friendly and this is something they have been working on,” he told Saipan Tribune.