Lawmakers override veto of retirement reform bill

HAGÅTÑA, Guam—Thousands of Government of Guam (GovGuam) employees with insufficient account balances under the current Defined Contribution Retirement Plan (DC Plan) will finally retire in dignity, as lawmakers, in a true show of bipartisanship, voted to override Gov. Calvo’s veto of Vice Speaker Benjamin J.F. Cruz’s landmark retirement reform measure, Bill No. 2-33(LS). With the enactment of the measure, 8,000 DC members will now have the option to stay in their current retirement plan, or transition to either the “Defined Benefit 1.75 Plan” or the Guam Retirement Security Plan.

Formerly referred to as “the Hybrid,” the retirement proposal was renamed the “DB 1.75 Plan” to reflect a major component of Bill No. 2-33 (LS): a conservative Defined Benefit system with the inclusion of a Deferred Compensation (457) Plan. While current DC Plan retirees only receive benefits equal to the growth of their investment, DB 1.75 Plan members would receive a guaranteed annuity based on a formula that considers both the number of years worked and the average of the three highest base salaries. The DB 1.75 also includes a 457 Plan, in which GovGuam employees have the opportunity to contribute more toward their retirement.

In addition to the existing DC Plan, the Guam Retirement Security Plan, or Cash Balance Plan, serves as an option for all current employees as well as those hired after January 1, 2018. The plan, authored by Senator Michael F.Q. San Nicolas, would require a mandatory contribution from the employee and a corresponding match from the government with a guarantee that retirement account balances grow by at least 4 percent each year. This guarantee would protect employee investments from severe marketfluctuations.

Built on the combined efforts of the late Speaker Vicente “ben” Cabrera Pangelinan, the Government of Guam Retirement Fund (“Retirement Fund”), the Committee on Appropriations and Adjudication, and Senator San Nicolas, Bill No. 2-33 (LS) stands as one of the most researched public policies in Guam’s legislative history. The measure has undergone extensive review and discussion during its previous iterations as four separate bills (Bills No. 453-31; Bill No. 394-32; Bill No. 2-33; and Bill No. 266-33)—spanning three legislative terms, four years of legislative research and work, and nearly a decade of review and analyses by the Retirement Fund, its actuaries, investment advisors, and financial experts.

“Today, thousands of hardworking government employees won the possibility of a dignified retirement after a lifetime of service,” said Cruz. “I want to thank Speaker ben for beginning this work and my colleagues, on both sides of the aisle, for helping me finish it. Together, we kept the faith of the many men and women who’ve placed their faith in us.”