Bloomberg Law’s Lee Pacchia talks with Bloomberg News bankruptcy columnist and editor-at-large Bill Rochelle at the American Bankruptcy Institute’s Annual Spring Meeting in Washington DC about a new bankruptcy case filed by Northern Mariana Islands Retirement Fund.
All that is needed to save the NMIRF (the Fund) is for the Plan Sponsor (the Government) to prioritize and heed to a payment program on what it owes and what is needed every month to pay for current and future retirees. An Actuarial determination of what dollar amount is needed to purchase an Annuity program for all beneficiaries is all that is needed by an insurance company. But more importantly an assurance that payment will be made. If an insurance company can provide for an annuity program this will be most desirable because the entire program would be handled by professionals and by an entity completely devoid of the island politics. The government of the CNMI’s inability to make employer contributions, inclusive of the legislature’s wishy-washy role in everything regarding the Fund and local court’s toothless judgment orders, and as well as the unwillingness of pensioners to accept pension cuts make for a good arguments for the filing of the bankruptcy. I do hope that the bankruptcy court accepts and proceeds with the reorganization plan and for a much more aggressive collection of what is owed to us beneficiaries. oscar
not sure why the pensioners should take cuts at this point. i really believe that issue is not over generous benefits. yes, there are some that get way more than a fair share, but even the breakdown of pensioners clearly shows that a majority just get a moderate retirement pay. at the moment the
- 2414 active retirees get around $23K/year.
- 574 survivors get around $10/year.
- 198 children get around $6K/year
average federal pension is $60k/year, and here is a list of the averages in all states as of 2009. we are not off the mark we are about average on that scale too( http://www.empirecenter.org/DataBank/FileData.cfm?FileID=224 )
the heart of the problem is and always has been the governments failure to pay. if the government had not passed a law giving them a 6 year holiday (no payments at all), and if they had not cut off a bunch of employer contributions by creating the DC Plan, and not setting aside $113 million, and if they had been paying the full actuarial rate all these years than the fund would be sitting at about 70% funded. that would be a healthy plan in this climate.
there are sources for funding. not all but a big chunk that is needed to stabilize the fund. here is a short list:
- reduce constitutionally protected salaries of elected officials and other government workers (already violating the constitution by moving to impair benefits)
- halt all legislative and executive branch discretionary funding and immediately remit those amounts to the fund (in the millions every year). the legislature can use the LB as should be the case.
- sell off all vehicles
- allocate 100% of all future new and renewed public leases to the Fund
- sell off the abandoned government owed homes on capital hill to NMDs or long term lease to others and transfer all money to the FUND
- sell off the government owned homes in Garapan (behind GES) or lease to non-NMD and allocate all money to the fund
- cancel out all travel accounts in every department and allocate those money to the Fund
- redirect all government funds allocated to festivals and tournaments (baseball, july 4th, fishing, etc) to the Fund
- ramp up enforcement at Dept of Rev, DPS and at customs. if need be farm it out on consignment to a certified group. all new revenues realized by these efforts to go to the fund.
- cancel all unneeded contracts with outside consultants (any that can be justified need to be done so publicly and determination be made by the courts). this includes all outside legal counsel in all divisions of government especially the NMIRF. they have paid millions over the past few years to outside counsel.
- Act on the findings of recent desk audits of the DPS and DCCA. conduct new ones and act on them for all other divisions of government.
- transfer various other developed yet unused public properties over to the fund to sell or lease out such as the Marianas House in DC. CHC was transferred a $15 million plot of land overnight upon request just a month ago. it is possible and should be done.
this list is very much longer. over the past 3 years the NMIRF has been sitting in court with the Government’s AGs “talking” about collecting on the judgement. the Fund is an arm of this government i believe that has affected and negatively influenced their desire to push to collect on that judgement. to date, the administration has paid nothing towards the judgement. they still continue, even after the judgement to skip payments and pay far below the actuarial rate for active DBP members.
all efforts should have been and should still be put towards securing payments such as those above that are rightfully due to the fund.
bankruptcy does not give that adequate focus or priority.
also, i believe that letting a government sponsored pension plan file for bankruptcy will set a terrible precedent. no sponsored pension plan has ever filed for bankruptcy (either public or private). it is the municipality/county sponsor or the private corporation sponsor that files. which makes sense since they ultimately control the purse.