COMMONWEALTH RETIREMENT ASSOCIATION
P.O.BOX 7879 SVRB
SAIPAN, MP 96950

June 3, 2010

Congressman Ramon S. Basa
Chairman
Standing Committee on Ways and Means
17th Commonwealth Legislature
Jesus P. Mafnas Building
Capitol Hill
Saipan, MP 96950

Dear Mr. Chairman:

Thank you for the opportunity to meet with you last week regarding the Pension Obligation Bond (POB) for the Retirement Fund.  I hope you have digested my letter dated June 21, 2010 that was sent by our Secretary, Oscar C. Camacho sent you by E-Mail.

As I indicated on my letter and during our meeting, there is repayment ability on the $280 Million POB from the proceeds from the regular remittance of nearly $30 Million from the government (Employer and Employees) contribution to the Retirement Fund.  Instead of paying the Retirement Fund, the CNMI government should secure the POB in the tune of $280 Million and remit its payment to the bond.

Mr. Chairman, it is very critical that the CNMI government make a good faith effort to honor the Court Judgment awarded by the Superior Court on the $231 Million and counting.  Just imagine if the Retirement Fund cannot pay its obligations to the Retirees and future Retirees.  Presently, there are 6,584 members for the Defined Benefit Plan.  A conservative figure, multiply 6,584 members times 2 (husband and wife), you get a product of 13,168 individuals that will be affected should the Retirement Fund become financially insolvent (BROKE).  Imagine the effect on these Retirees and their families if there are no means to pay for their daily living and medical bills.  Imagine the buying power of the Retirees and what it will do to our economy should this be taken away from them; our economy will become worst! A disaster! The other concern is if the CNMI government does not expeditiously make good on the Judgment Order, the Federal Court might step in.  Presently, there is a pending case against the Retirement Fund in the Federal Court to turnover the Retirement Fund into Receivership. This in itself is a frightening thought if liquidation is the objective. If the Receivership’s goal is to squeeze the CNMI Government with everything it has to pay its obligation to the FUND then we should welcome it. Unfortunately, we have no assurances of the direction to be taken; all in all it is not going to be pleasant for retirees and for the CNMI Government to be under receivership.

Please act on the initiative for the Pension Obligation Bond and send it out to the public to vote this coming November. 

Your cooperation is greatly appreciated.

Sincerely,

Juan M. Sablan
Chairman

cc:  All members of the Legislature,   CRA Board of Directors