Senate OKs withdrawal of up to 50 percent of Fund contribution

Non-retired members of the NMI Retirement Fund are a step closer to getting their money back, albeit only up to 50 percent-and not 100 percent as originally intended-of their defined benefit plan contributions without penalty under a “compromise” version of the controversial House Bill 17-226 that the Senate passed last night by a vote of 6-2.

The rest of the contributions will be rolled over to the defined contribution plan.

The original HB 17-226 allowed for withdrawal of up to 100 percent of members’ contributions to the DB plan, which the Senate opposed and instead offered just a rollover to the DC plan and a hardship loan.

HB 17-226’s latest version retains the provision that non-retired Fund members could refund their contributions by withdrawal and/or rollover and still continue their government job, as well as move from the DB plan to the DC plan.

The House is poised to also act on the compromise version of H.B. 17-226 in today’s session.

If the House passes the bill, it will be on its way to the governor for action.

Amounts withdrawn shall be paid within 180 days following the date on which the member is eligible to receive a refund of the members’ contributions, the latest version of the bill states.

Speaker Eli Cabrera’s (R-Saipan) bill has been bouncing between the two chambers for almost seven months until a conference committee was formed to work on a so-called “compromise” bill. The result was HB 17-226, House Draft 1, Senate Substitute 1, Senate Draft 2, Conference Committee Substitute 1.

Six of the eight senators present during yesterday’s session voted “yes” to the compromise bill, two voted “no,” and one was absent.

The two who voted against it were Senate floor leader Pete Reyes (R-Saipan) and Sen. Luis Crisostimo (Ind-Saipan). Sen. Henry San Nicolas (Cov-Tinian) was absent.

Those who voted for the bill’s passage were Senate President Paul Manglona (Ind-Rota), Senate Vice President Jude Hofschneider (R-Tinian), and Sens. Juan Ayuyu (Ind-Rota), Frank Cruz (R-Tinian), Jovita Taimanao (Ind-Rota), and Ralph Torres (R-Saipan).

Torres, in an interview last night, said the compromise bill is “good for all current government employees.”

“They now have the option to withdraw up to 50 percent of their contributions from the DB plan and roll over the rest to the DC plan. It also extends the option for early retirement for three years,” Torres told Saipan Tribune.

House floor leader George Camacho (Ind-Saipan) said yesterday he will vote “yes” on the bill today, adding that the leadership is “most likely” to vote for it.

Rep. Fred Deleon Guerrero (Ind-Saipan) also said he will vote “yes” on the latest version of HB 17-226.

“It is the right thing to do returning the people’s money. [Up to] 50 percent they would be allowed to take out and 50 percent transfer to the 401K retirement plan. I believe this is one of the more needed bills to assist the people of the Commonwealth,” he said.

Rep. Ray Tebuteb (R-Saipan), for his part, said there’s “no clear financial analysis.”

Early retirement

The compromise bill also extends the early retirement period provision of Public Law 15-70 by an additional three years.

The supposed five-year transition period under PL 17-50 will end on June 13, 2012.

Under the joint House-Senate version of HB 17-226, that period will be extended up to June 13, 2015, “to give active members more time to pay their lump sum contribution to the Retirement Fund.”

The six-member Conference Committee on HB 17-226 are co-chaired by House Vice Speaker Felicidad Ogumoro (Cov-Saipan) and Senate Fiscal Affairs chair Sen. Jovita Taimanao (Ind-Rota). The members are House floor leader George Camacho (Ind-Saipan), Rep. Teresita Santos (Ind-Rota), Sen. Frank Cruz (R-Tinian), and Sen. Ralph Torres (R-Saipan).

In their five-page report, the conferees said they met several times and heard from the Retirement Fund, the ASC Trust Corp., Joe Pangelinan, and other active Fund members.

The conference committee stated that the enactment of the bill “will lessen the government’s financial liabilities as it authorizes qualified government employees to withdraw their contributions from the Retirement Fund, thus decreasing the government’s financial obligations to the pension fund.”

“The potential adverse effect of this measure, however, is that it lessens the NMI Retirement Fund’s lifespan, which will create an immediate financial obligation of the Commonwealth government retirees’ pensions,” the report said.