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False rumors
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Posted on May 02 2012
The rumor is widespread that once the Retirement Fund’s bankruptcy goes into effect, benefits will be cut 58 percent. This is not true. A report prepared by Retirement Fund staff for a public hearing several months ago showed four graphs of the lifespan of the Fund, which varied depending on how big a cut was made to the benefits. As was to be expected, the graphs showed that the bigger the cut in benefits, the longer the Fund would survive. That’s where the 58 percent cut comes from. It has not been chosen, approved, or recommended by anyone.
What’s more, those graphs did not change any of the benefits, and we all know there are serious problems with who gets what and how much in terms of various forms of pension. Under Chapter 11 bankruptcy, those benefits may be modified, even though ordinarily protected under the Constitution and various other laws.
Thus, it would be possible—and, I would suggest, highly likely—to set a ceiling on the amount of pension benefit any retiree would receive, that “extra” bonus provisions be deleted, that persons deemed to be unreasonably receiving pension benefits be dropped from the list.
It is not yet known how much of a difference that would make in the graph curves showing the lifeline of the Fund (such alternatives were not even considered at the time) but clearly, it would make a difference, and it could be enough to change that 58 percent to something far more bearable.
In addition, those graphs assumed that the CNMI economy would stay as bad as it is now over the life of the graph. It may be grasping at straws but, with the military buildup in Guam, increased military use of Tinian, and with a new governor two years from now (if not sooner), I believe there is no way for the economy to go but up, and that too will serve to lower that 58 percent to something more bearable.
We should all be working toward keeping the Retirement Fund alive so that it will be there for all of us when we retire. If we kill it, no one will gain anything.
That’s not to say the defined contribution plan should remain unchanged. It too needs help and restructuring. Who knows, maybe under the bankruptcy powers, that too could be improved!
[B]Ruth L. Tighe[/B] [I]Tanapag, Saipan[/I]
