‘Some retirees get nearly $100K a year’

The CNMI’s troubled retirement program gives some retirees close to $100,000 in pension every year, according to NMI Retirement Fund administrator Richard Villagomez.

Speaking at the weekly Saipan Rotary Club meeting yesterday at the Hyatt Regency Saipan, Villagomez said the amount is being compounded by the cost-of-living-allowance mandated by law.

The Fund has about 2,800 beneficiaries composed of retirees, spouses, and surviving children. Last fiscal year, the agency paid out a total of $63 million to cover all benefits.

According to Villagomez, the nearly $100,000 pension check of some retirees is the highest paid by the Fund, while minimum pension benefit amounts to only $6,000 a year.

Surprised by the huge amounts provided to some retirees, Rotary members sought an explanation as to how the Fund came up with the amounts.

“On an annual basis, the smallest pension is $6,000 because that’s the minimum set by the law while the highest pension is close to $100,000, if not more. How to qualify for this $100,000 pension? Well, the basic calculation is your pension base is about 50 percent of what your earnings are,” he explained.

Obviously, he said, a member should be earning a lot more than $100,000 to receive that amount of pension. But because there are no government jobs in the Commonwealth that pay $200,000, Villagomez said that the pension benefit continues to increase every year due to the compounding effect of COLA.

“This means if they are retirees for 15 years or 20 years, the COLA were added every year to their pension base,” he said.

Saipan Tribune learned that among retirees who get high pension checks are retired judges and justices and retired government officials.

Although the Legislature has repealed the COLA law, it still requires the Fund board to vote every year whether to provide COLA or an annual retirement bonus to members every year. In fiscal year 2011, the board approved to give out an annual bonus because it has no compounding effect on the base pension of members.

Fund board chair Sixto Igisomar earlier said that the only time the Fund can provide additional benefits is when the pension plans’ funding level is at 80 to 100 percent. At present, the Fund’s $264 million portfolio represents a funding level of just 38 percent, he said.

Igisomar said the Fund wants to eliminate the distribution of any of the two. “Whatever you call it-COLA or bonus-we are trying to stay away from it because the only time we will be heading toward COLA or bonus is if we actually hit the 80 to 100 percent funding level and we’re not,” he told Saipan Tribune.