Lawmakers discuss contributions to Retirement Fund
By Jason M. Goldman-Hall
HAGÅTÑA — The future of the Retirement Fund was questioned in yesterday’s round of budget hearings at the Guam Legislature.
An amendment in the budget to raise the percentage of government payroll money contributed to the Retirement Fund from 18 to 20.81 percent was approved, although at some points, an increase to as high as 32 percent was discussed.
Members of the Retirement Fund board, including Director Wilfred Aflague, were on hand to present the findings of a hired third-party’s assessment of the Fund’s needs — the source of the different percentages.
In the third party’s findings, two figures — a minimum required contribution rate, and a recommended contribution rate— were presented. The lower percentage — 20.81 — was found to be the minimum required amount to begin fixing the fund’s problems.
One of the biggest threats to the Fund was brought up by Sen. Robert Klitzkie, R-Yigo, who pointed out that the Retirement Fund newsletter claimed that if the current problems continue, the fund would cease to function in about 10 years.
According to Vice Speaker Frank B. Aguon, D-Yona, the Retirement Fund is currently owed $1.24 billion in unfunded liability by the government for benefits paid to retirees. Included in this figure is a $15 million amount owed by the Department of Education to the Fund.
Aguon said the liability has left the Legislature and the Retirement Fund “playing catch up.”
A second figure of 26 percent was also discussed. That percentage was the recommended percentage for contributions to allow a recovery. The Retirement Fund board asked for the 26 percent rate because it would have allowed them to pay off the liability sooner. According to Aflague, 90 percent of the liability could be paid off by 2020.
Aguon, pointing out that the current unbalanced budget has a deficit of more than $20 million, said the additional $11 million that would be directed to the Fund at the 26 percent contribution rate was an amount that the Legislature does not presently have to allocate.
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