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/ Wednesday, December 29, 2021
Government Avoids Falling Back into Old Bad Habits
FOMB and Governor Pierluisi come to agreement over Pension laws
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Zoe Landi Fontana, The Weekly Journal
he Financial Oversight and Management Board of Puerto Rico (FOMB) and the administration of Governor Pedro Pierluisi came to agreement over Joint Resolution 33, and Acts 80-2020, 81-2020, and 82-2020 after the Board filed a lawsuit against the latter last week. Their agreement will “...avoid costly and timeconsuming litigation and a potential delay in confirmation of the Plan of Adjustment to reduce Puerto Rico’s debt and end bankruptcy…” and “... move Puerto Rico forward without the risk of falling back into old practices of overspending,” the FOMB said in a written statement. The government entities have 60 days to reach an agreement regarding enhanced retirement benefits for police officers, and 120 days to agree on the possibility of providing increased compensation packages to teachers.
reduce Puerto Rico’s debt to sustainable levels. The Plan of Adjustment is now in the process of confirmation. Yet, the three pension laws create new pension debt obligations tied to an already bankrupt pension system,” said Board Chairman David Problems With Joint Skeel. Resolution 33 And Over the past year, the Board Acts 80-82 and Government The three laws - Acts were working to 80-2020, 81-2020, and find reasonable and 82-2020 - were intended affordable ways to to increase benefits implement new pension for retired policemen –Pedro Pierluisi, laws, but agreement and teachers, the cost governor of Puerto Rico was never reached. of which the Board Furthermore, the deemed unaffordable administrations of under the current fiscal former Governor Wanda Vázquez and Governor plan. Pierluisi had agreed not to implement the Pension The pension law promised increases in benefits laws without approval from the Board. projected to cost at least $8.3 billion. “The Thus, after Governor Pierluisi went ahead and government enacted Act 80, Act 81, and Act 82 submitted Acts 80-82, which would have gone in August 2020 without sufficient analysis of how into effect within 30 business days, the Board much the new retirement benefits would cost and commenced legal action to stop them. how to pay for the additional costs,” the Board In a letter from Dec. 20, 2021 to Fiscal Agency expressed in a statement. and Financial Advisory Authority (AAFAF, for its “We have been working for five years to
We have submitted the agreement to judge Laura Taylor Swain knowing that the legislation approved in 2020, despite its laudable purpose, are not totally consistent with the Fiscal Plan.
In fact,
The pension law promised increases in benefits projected to cost at least $8.3 billion.
Natalie Jaresko, executive director of the Financial Oversight and Management Board (FOMB) and Gov. Pedro Pierluisi. >Carlos Rivera Giusti / The Weekly Journal
Spanish acronym) director Omar Marrero Díaz, Chairman Skeel wrote of Joint Resolution 33 and Acts 80-82; “The costs from these laws would make the Plan of Adjustment not feasible. Moreover, these laws inequitably select certain groups of employees for special enhanced pension benefits while other employees will only receive payment in full of their pension pursuant to prepetition laws… provided in the Plan of Adjustment.”
An Agreement Is Reached
Nevertheless, Pierluisi announced earlier this week his administration and the FOMB had reached an agreement to improve the pensions of retired policemen and for an incentivized early retirement window for several government agencies. According to Pierluisi the retirement window would allow for fiscal savings and alternatives to better teachers’ salaries. The governor informed the agreement had been submitted to federal judge Laura Taylor Swain for her approval. “We have submitted the agreement to judge Laura Taylor Swain knowing that the legislation approved in 2020, despite its laudable purpose, are not totally consistent with the Fiscal Plan,” Pierluisi admitted. The governor explained the agreement outlines an alternate plan to achieve the goals originally set by Acts 80, 81 and 82 from 2020.
