Reyes slams Fund for federal income tax deduction

Senate floor leader Pete Reyes (Ind-Saipan) said the Settlement Fund doesn’t need to automatically deduct federal income tax on the 25-percent deferred pension payments to retirees since most retirees like him already indicated their preference when they submitted their W-4P when they first received their pensions.

“I have the right. Whatever interest and penalty I need to pay, I pay. This is in their file already. They know what I want. They know that several other retirees have their own W-4P on their file. So why do they need to ask them again?” he asked.

Reyes, who will retire after the 18th Legislature, suspects that something is afoot with the Settlement Fund.

“If they continue to delay this, you can only suspect that something not good is happening. This is the responsibility of every individual. It’s required by the employer and in this case, I guess, the Settlement Fund is our employer. But we submitted that the first time we became entitled to receive pensions. It’s in their records. They know what we want. They don’t need to deduct 10 percent. If it’s in the file then deduct the 10 percent. But if it’s in their file and says they don’t want the federal tax deducted, then don’t deduct.”

If this practice persists, the Settlement Fund might be justified to charge CNMI retirees for administrative costs, he added.

“This is giving them a reason to charge us for administrative costs. This is something that’s rather disturbing for me. If it’s in their file that says deduct for exemptions claiming, then deduct. But for them to come out and ask them to resubmit…this is a choice by individual pensioners to do. It’s very unnecessary and it’s an injustice to retirees who need their money now. This is governmental bureaucracy!”

‘Battered buying power’

Former Department of Public Lands secretary John DelRosario bemoaned the non-guaranteed nature of retirees getting 25 percent of their deferred pension under the settlement agreement in the Betty Johnson case.

“The increase in health premium by 40 percent, $1,000 health deductible, costly power bills and increase in cost of living by at least 24 percent plus the seesaw payment of the 25 percent in pension pay doesn’t leave much room to navigate heavy reduction in our battered buying power.”

DelRosario, a Saipan Tribune columnist, said the fact that pensions are now cut in court-ordered payments is a tell-all that the current CNMI government is bankrupt.

“Even government utility debt must now be paid via court-ordered mode of payment where CIP funds are now being used to meet this obligation. Moreover, NMI refuses to appropriate some $38 million to defray the operations of [the Commonwealth Health Center].”

He said it boils down to the CNMI government being broke.