Lack of unified stance on Social Security buyback delaying bill

Delegate Gregorio Kilili C. Sablan (Ind-MP) said he is ready to introduce legislation in U.S. Congress to include the CNMI in the definition of “state” to allow a buyback into the Social Security system, but delaying such introduction is the lack of a unified stance among the administration, the House, Senate, retirees, and active members on whether they want a buyback and where the money will come from.

“When the Commonwealth as a government fully and finally make a decision on whether they want a buyback or not, the lieutenant governor will give me instruction. I will introduce legislation and include the Northern Mariana Islands in the definition of state, in Section 218 of the Social Security Act,” Sablan told Saipan Tribune in an interview on Saturday morning.

As of Friday night, Lt. Gov. Eloy S. Inos, he said, has yet to give him the go-signal to introduce such legislation.

His legislation would amend the Social Security Act’s Section 218 b(1) and e(1).

Sablan said it is difficult to get everyone on board on the Social Security buyback, even after the U.S. District Court dismissed the Retirement Fund’s Chapter 11 bankruptcy filing on Friday.

“They’re not agreeing among themselves and they don’t know where the money is coming from for the buyback,” the delegate said.

Inos, who has been heading the Fitial administration’s efforts in addressing the Retirement Fund crisis, including a Social Security buyback. He said initial estimate is that $60 million will be needed for a five-year buyback, inclusive of employee and employer contributions.

Inos has been meeting with lawmakers and retirees, and plans to also meet with active members, on the issue. Retirees and active members have different views about the buyback.

Some lawmakers, especially those supporting an override of the governor’s veto of House Bill 17-226, are not fully convinced that a buyback legislation will be that easy so they want active members of the Retirement Fund’s defined benefit plan to be able to withdraw up to 50 percent of their contributions now.

Rep. Joseph Palacios (R-Saipan) said even the delegate cannot guarantee how long his proposed legislation would move in Congress.

But Sablan said “we need to start somewhere.”

“Again, the Commonwealth government needs to fully and finally make a decision on whether they want the buyback for Social Security and once they do that, then I will work with Congress in trying to amend Section 218 [of the Social Security Act] to allow for this buyback. The buyback cannot be for more than six years. But even doing this, we need to know where the money is going to come from,” Sablan added.

Senate President Paul Manglona (Ind-Rota) said the Senate leadership supports a Social Security buyback for many active members, but cautioned that doing so is just one of the many steps that needed to be taken to also protect current retirees.

“A Social Security buyback is a good idea under the circumstances. But that’s only addressing about one-third of the problem. What about the retirees? I say it again, we need to go back to Judge Kenneth Govendo’s June 15 deadline to come up with solutions to help the Fund extend its lifespan,” Manglona said in a phone interview.

He reiterated the passage of pending initiatives and bills to help the Fund, many of whom, he said, are now with the House.

Manglona also recommends that House Speaker Eli Cabrera (R-Saipan), author of HB 17-226, also pass a bill that would cut tax rebates by 20 percent, to accompany the override of HB 17-226.

The House failed to override the governor’s veto of HB 17-226 on Thursday because it lacked three votes to meet the 14 votes required.

Cabrera, in a separate interview, said he will call for another session to reconsider vote on the bill’s override.

Sablan said he doesn’t see disagreement between the Legislature and the administration on returning the contributions of the Fund’s active DB members.

“And I also think that because of the Retirement Fund, in the situation it is today, I also think that these people should get their money back. Having said that, there is a concern and I asked some DB members themselves about the concern that there won’t be a safety net for them. And that the defined contribution plan alone is not enough. So getting back into Social Security prospectively would be great for brand new employees, but for those who have been in the system for some time, a buyback would be a necessary thing to do,” he added.

Rep. Frank Dela Cruz (R-Saipan), one of those opposed to an override of HB 17-226’s veto, said the bill should be amended to ensure that the other 50 percent of the members’ contributions will go toward Social Security instead of a DC plan.

He said he and others who voted against the override will support that amendment to HB 17-226.