23 pending bills impact Fund

At least 10 of 23 pending bills and initiatives under review by the Senate Special Committee on the NMI Retirement Fund will either add or reduce costs for the Fund ranging from $60,000 to over $100 million. Other pieces of legislation have yet to be fully reviewed.

Sen. Jovita Taimanao (Ind-Rota), chair of the special committee, said yesterday that one of two subcommittees formed is tasked with reviewing legislation impacting the Fund and it has so far come up with 23 measures.

These pieces of legislation include House Speaker Eli Cabrera’s (R-Saipan) bill allowing Fund members to withdraw their contributions from the pension agency without severance of employment or penalties. House Bill 17-226 passed the House and is now with the Senate.

The Fund previously said this will cost the agency over $100 million, but Taimanao said the special panel is waiting for an updated figure from subcommittee chair and Fund administrator Richard Villagomez.

Of the 23 measures, three are Senate initiatives, six are Senate bills, and 14 are House bills.

As of yesterday, the Fund is opposed to six of these measures, in support of 13, neutral on one bill, no position on another one, and has yet to take a position on two others.

Rep. Ralph Demapan (Cov-Saipan) said yesterday he is greatly concerned about the Fund’s poor condition and the effect it has on its active and retired members.

Demapan, chair of the House Committee on Judiciary and Governmental Operations, wrote a letter to Speaker Eli Cabrera (R-Saipan) yesterday, citing Senate President Paul Manglona’s (Ind-Rota) formation of a Fund review committee. That letter also invited House members to participate in the committee.

As of yesterday, the speaker has yet to heed the Senate president’s request for House members to form a committee on Fund issues.

Demapan, in his letter to the speaker, recognized that addressing the Fund’s concerns will be difficult and that finding a solution that will be fair and equitable to everyone will be even more challenging.

“However, I agree with your position that the Legislature…needs to put aside politics and work together,” said Demapan.

The Fund is opposed to Senate Legislative Initiative 17-3, which it estimates to negatively cost the Fund $2.5 million.

This initiative, introduced by Senate floor leader Pete Reyes (R-Saipan), proposes to amend the Constitution to explicitly state that qualified retirees may be employed as classroom teachers, doctors, nurses and other medical professionals without loss of retirement benefits, regardless of the individual’s occupation prior to retirement. It also clarifies the term “medical professionals” to include dentists, dental lab technicians, dental assistants, therapists, veterinarians, and animal health officer.

The Fund said that SLI 17-3consumes CNMI resources that can be used to help the Fund via reduction in payouts or increase in contributions.

The Fund supports Senate President Paul Manglona’s (Ind-Rota) SLI 17-13 and SLI 17-14.

The first one transfers certain public lands to the Fund, while the second one transfers certain funds from the Marianas Public Land Trust to the Fund. “The Fund supports measure that potentially provides additional funding to support payouts to retirees,” the pension agency said.

Based on the Senate special committee’s documents, the Fund estimates that SLI 17-14 will result in $2 million additional money for the Fund.

The Fund supports Senate Bill 17-35, which transfers the function of paying the special annuity benefits for governors and lieutenant governors from the Fund to the Department of Finance; SB 17-36 SD1, which defines “child” to include adopted children after retirement benefits; and SB 17-94 SD1, which suspends the Fund’s procurement restrictions for 90 days.

The Fund said that SB 17-36 SD1, for example, will result in $100,000 savings by curtailing abuses found among retirees who adopt their grandchildren to circumvent the Fund’s enabling Act.

The pension agency also said SB 17-94 SD1 will result in $7 million savings.

Two Senate bills, however, are not favorable to the Fund: SB 17-27 SD1 and SB 17-29 SD1.

SB 17-27 SD1, which temporarily suspends early retirement penalty and referendum protections, is expected to cost the Fund an additional $3.6 million.

SB 17-29, meanwhile, allows repayment of early retirement penalty to be deducted from pension over time using an actuarially determined repayment rate. There is no cost estimate for this bill yet.

The Fund supports eight House bills and opposes three.

It opposes HB 17-11, which restores payment flexibility to Class I members.

It also opposes HB 17-40 HD1 SS1 SD2, which it says will bring an added cost to the Fund of $1.44 million. This bill proposes that only 60 percent of the Judiciary collections be placed in a Judicial Building Fund, among other things.

The Fund is also opposed to HB 17-204, removing entirely the June 2012 date for early retirement, among other things.

The Fund supports HB 17-13, transferring the administrative function of the Group Health and Life Insurance from the Fund to Finance, saying it will reduce Fund expenses by $7 million.

The agency also supports HB 17-14, transferring the administrative function of the Workers Compensation Commission from the Fund to Commerce, and will result in $60,000 savings for the Fund.

HB 17-74 also got the Fund’s support. This bill allows the Fund to assess interest on over or under payment of benefits.

The Fund also supports HB 17-77 HD1 SD2, amending the life insurance statute in order to negotiate a better life insurance policy for active government employees and current retirees.

It also said HB 17-98 HD1 will result in $270,284 savings to the Fund, by stopping the accrual of retirement or disability benefits beyond $40,000 for any member.

The Fund also supports HB 17-99, which provides for an actuarially determined amount necessary for the Fund to be annually appropriated; HB 17-100, which reorganizes the board of trustees; and HB 17-220, which repeals the beneficiary derivative lawsuit act.

The Fund, however, has no position on HB 17-97, which includes membership from a chartered or incorporated organization representing CNMI retirees.

The Fund also said it is neutral on Cabrera’s HB 17-226, the contribution withdrawal bill.

“However, there must be a funding mechanism for the Fund to pay pension and meet all CNMI government obligations,” it said.

It’s not known yet what the Fund’s position is on SB 17-94 and HB 17-217.

Experts earlier said that the Fund could only have a three-year lifespan considering its assets, liabilities, unfunded liabilities, and lack of government employer contribution payments, among other things.