Monday, October 18, 2021

Governor Urges Oversight Board To Avoid Pension Cuts

By on July 12, 2021

Pierluisi asks office to consider bills proposed by his administration

Governor Pedro Pierluisi urged the Financial Oversight and Management Board (FOMB) and the Legislature to consider two bills presented by his administration that would shield retirees from pension cuts while avoiding a costly legal battle.

During a press conference held today, Monday, Pierluisi repeated his position of “zero pension cuts” for former government employees after the FOMB sued the commonwealth for not complying with the reductions. He said the proposed laws would provide a legal path to protect a community of pension holders that have already suffered cuts to their benefits during the last years.

“I hope the oversight board and that the Legislature consider both measures to solve this impasse,” said Pierluisi during a press conference about investments in the Puerto Rico Metropolitan Bus Authority (AMA by its Spanish acronym).

One of the bills called “Zero Cut to Pensions” proposes that pensiones be handled within the budget process and Title II of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), which governs the responsibilities of the FOMB. The bill would require the amendment of local law and will have a fiscal impact of $1.5 billion during the next 20 years. On the other hand, the oversight board proposes cuts within Title III of Promesa that handles the adjustment of debts.

The second bill, Law to Guarantee the Right to a Fair Pension, reiterates the public policy of no more cuts and states that employees who have entered the pension system following two local laws have the right to pay a pension equivalent to 50% of their salary when they retire from public service. The measure establishes that these pensions would continue to be paid through a “pay as you go” mechanism approved in Law 106-2017.

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