Senate OKs 5 measures to help save Fund

By Haidee V. Eugenio
Reporter

The Senate passed yesterday two bills and three initiatives aimed at prolonging the lifespan of the NMI Retirement Fund but held off action on a controversial House bill allowing withdrawal of retirement contributions, mainly because of concerns over the Senate-proposed amendment calling for “rollover” instead of “withdrawal” of contributions.

By a vote of 6-1 with one abstention and one absence, the Senate passed a bill repealing a three-month-old law allowing Fund beneficiaries to sue on behalf of the pension program if the board refuses to bring such legal action.

Most of those who voted in support of the original bill that became Public Law 17-51-including the original bill’s author, Senate floor leader Pete Reyes (R-Saipan)-had a change of heart and backed the repealer, Senate Bill 17-94, Senate Draft 2.

Reyes said he now supports repeal of the law because the law’s objective had already been achieved. At the time, proponents of the bill wanted the Fund to join the lawsuit against former Fund money manager Merrill Lynch for alleged improper fund management practices. The Fund eventually sued Merrill Lynch.

“We don’t need this law anymore,” Reyes said, in supporting the repealer bill that Senate Vice President Jude Hofschneider (R-Tinian), Sen. Juan Ayuyu (Ind-Rota), and Sen. Henry San Nicolas (Cov-Tinian) authored.

A similar repealer bill is pending in the House.

Sen. Frank Cruz (R-Tinian), the only senator who voted “no” to the repealer yesterday, recommended that the Senate amend instead of repealing the law that was enacted in September.

Sen. Jovita Taimanao (Ind-Rota), chair of a special Senate committee tasked to review Fund bills, abstained from voting, while Sen. Luis Crisostimo (Ind-Saipan) was absent.

The Senate also passed S.B. 17-99, SD1 by a vote of 8-0. This bill, signed by the whole Senate, transfers the administrative functions and liability of the Government Life and Health Insurance Program to the Department of Finance.

3 initiatives passed

Senate President Paul Manglona’s (Ind-Rota) three legislative initiatives to help save the Fund also passed the Senate by a vote of 8-0 each, or more than the three-fourth vote required. If passed by the House, these initiatives will be presented to voters for ratification.

Senate Legislative Initiative 17-13, SS1, SD1 seeks to amend Article 11 of the NMI Constitution to transfer the disposition and management decision of public land golf course leases to the Fund.

The initiative allows the Fund to lease public land golf courses for up to 99 years-instead of only up to 55 years-for $50 million or for an amount determined by two certified independent appraisals, whichever is greater.

Reyes offered a floor amendment that ensures the amount that the Fund received is repaid under “reasonable terms and conditions” by the CNMI government to the Marianas Public Land Trust after the employer contributions are paid in full and all unfunded liabilities of the CNMI government for the Defined Benefit Plan retirement system are satisfied. The Senate adopted Reyes’ amendment.

Under the initiative, the Department of Public Lands shall transfer all money from public land golf course leases to the Fund until the government employer contribution is paid in full and all unfunded liabilities for the DB Program pensions are satisfied.

Upon the Fund’s approval, DPL is supposed to execute a 99-year lease pursuant to the terms that the Fund determines. DPL also shall not transfer an interest in any public land golf course without the approval of the Legislature in a joint session.

If this initiative passes and is approved by voters, DPL will hold fee simple title to all existing public land golf course leases.

These are the Coral Ocean Point Golf Course, Laolao Bay Golf Resort, Rota Resort Golf Course, Marianas Country Club Golf Course, and all other golf courses to which a current land lease is in effect with the CNMI government.

Senators also passed SLI 17-14, SD1, seeking to amend Article 11 of the NMI Constitution to provide for the transfer of funds from MPLT to the Fund.

This involves the use of the interest on the amount received for the lease of property at Tanapag Harbor for the development and maintenance of a memorial park. This proposed constitutional amendment shall apply beginning on the fiscal year after the loan to the Commonwealth Utilities Corp. is paid in full.

The Senate also passed SLI 17-15, SD1, seeking an amendment to Section 9(a) of Article 3 of the NMI Constitution to set aside 25 percent of the revenues to pay the government’s employer contribution to the Fund.

Fund administrator Richard Villagomez and counsel Carolyn Kern, during the Senate session, said the Fund supports this initiative if the 25 percent is on top of the actuarially determined employer contribution to the Fund.

Contribution withdrawal

While the Senate’s morning session ran until around 3pm without lunch break, senators didn’t vote on House Speaker Eli Cabrera’s (R-Saipan) House Bill 17-226, HD1 as substituted by the Senate because of concerns on the Senate amendments.

However, the Senate entertained yesterday public comments on the bill, which would be the first bill to be acted on by senators when the session convenes this morning.

The original bill seeks to allow certain non-retired Fund members to withdraw their contributions from the pension agency without being required to resign from their job or being penalized.

The Senate’s proposed amendment would not allow these non-retired members to get their money but instead allow them to “roll over” their contributions to the Defined Contribution Plan.

Joe Pangelinan, representing active members of the Fund who support the original HB 17-226, said that a compromise would be to allow non-retired Fund members to withdraw 50 percent of their contributions and not 100 percent so as to help the pension agency stay afloat.

Manglona, in an interview, said this will be one of the proposals that a special Senate committee and Fund officials will be discussing prior to the start of today’s session.

He also pointed out that the Senate’s proposed amendment also authorizes “hardship loans” in which a member may borrow up to 50 percent of his or her contribution.

The Senate amendment also allows a rebate offset amount to provide an alternative funding mechanism to pay for the rollovers. This provision is taken from a similar proposal from House minority leader Joseph Deleon Guerrero (R-Saipan).

Pangelinan said it’s a fact-and not a “scare” tactic-that the Fund’s lifespan is only a few years so active members should be allowed to withdraw their contributions.

“Fear is real, and we’re feeling it,” he added.

Guadalupe Borja Robinson, a retiree who went back to service, also asked the Senate to allow active members to withdraw their contributions.

“I want to be optimistic but let’s be realistic,” she said, adding that the government cannot even pay tax rebates.

Marja Lee Taitano, however, was the only one who voiced concern about the negative impact on the Fund of allowing active members to withdraw, saying it will hasten the demise of the pension agency.

Another member of the public said retirees have already enjoyed their pensions, but those who are still active members may not be able to benefit from their contributions when they retire so they want to withdraw their contributions now.

Reyes said in his 20 years as a member of the Legislature, he has not seen the Legislature approve funding to retire the Fund’s unfunded liability.

“We have not done enough to address the crisis facing the Retirement Fund,” he added.

The Senate floor leader said he recommends that a separate initiative be introduced to compel the government to retire the Fund’s unfunded liability.

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FAST FACTS

The five bills and initiatives that the Senate passed to help the Retirement Fund:

1. SENATE BILL 17-94, SD1: Repeals the beneficiary derivative lawsuit law

2. SENATE BILL 17-99, SD1: Transfers the administrative functions of the Government Life and Health Insurance Program from Retirement Fund to the Department of Finance.

3. SENATE LEGISLATIVE INITIATIVE 17-13, SS1, SD1: Transfers management decisions of public land golf course leases to the Fund.

4. SENATE LEGISLATIVE INITIATIVE 17-14, SD1: Transfers funds from the Marianas Public Land Trust to the Fund.

5. SENATE LEGISLATIVE INITIATIVE 17-15, SD1: Sets aside 25 percent of government revenues to pay the government’s employer contribution to the Fund.

Source: http://www.saipantribune.com/