Puerto Rico Teachers Association negotiates educators’ pensions
Says agreement with island’s fiscal board isn’t written in stone; slated to be voted on June 10
SAN JUAN — The executive director of Puerto Rico’s Financial Oversight and Management Board, Natalie Jaresko, said Tuesday that the fiscal plan it certified for the commonwealth includes $46.5 million for Social Security employer contributions to police, teachers and judges.
However, she stressed that lawmakers must vote on bills that would allow these public employees to enroll in Social Security.
“The Commonwealth must pass legislation that reduces police, teachers, and judges’ employee contributions to the Defined Contribution system to an amount lower than the 7.5% required by the Section 218 Agreement with the Social Security Administration, which will trigger mandatory enrollment in Social Security,” Jaresko said.
Earlier Tuesday, Puerto Rico Teachers Association President Aida Díaz said the tentative plan agreed to with the board over the teachers’ pension system was not written in stone and is conditioned upon the support of the teachers.
She said that, under the deal, teachers will also be able to accumulate Social Security benefits.
Teachers Federation spokesman Edwin Morales, however, described the tentative deal as treason. He said it would cut sick leave days as well as teacher pensions.
“It increases the retirement age to 63 because if you retire earlier, you will be left to the point of indigency,” he said.
Díaz said the deal covers active teachers only, “regardless of whether they are associated, transitory or disaffiliated.”
The interests of future retirees is represented by the Unsecured Creditors Committee in the Title III bankruptcy case under the Puerto Rico Oversight, Management, and Economic Stability Act (Promesa). Current retirees are represented by the Official Committee of Retirees.
Díaz said Monday that attorneys have been negotiating active teacher’s pensions with the board over the past year in an attempt to make sure that educators “future pensions are not unprotected” during the bankruptcy proceedings.
“There is a reality that no one should deny; the government debt with the teachers retirement system is a debt that is unsecured in the bankruptcy process,” Díaz said. “The teachers can’t stay with their arms crossed and be the last in the payment line. That is why, we sat down to negotiate a tentative proposal that is not perfect, but it protects our future in the long run.”
The provisional agreement guarantees that active teachers will receive a “guaranteed pension” and the current Teachers Retirement Fund would be converted into trust fund in which teachers will be able to participate.
“In this process, the Association is firm in that we reject any cuts to the pensions,” she said. “Nevertheless, in the bankruptcy processes, the parties have to fight and negotiate to get what they can. This tentative agreement is a product of the battle process.”
She said that although the pending agreement is “not the best, it is the most we could get.”
In a phone interview with Caribbean Business, Díaz said, “There were no possibilities of being able to get more, within what was being negotiated at the moment.”
She explained that the figures being negotiated will have to go through a voting process in which all teachers that form part of the Teacher’s Association will vote on the agreement.
“What we did was freeze the current [retirement] plan, the current plan says that if you are 50 years old and have 30 years of experience you will receive 65 percent, if you are 55 years old and worked for 30 years you would retire with 75 percent,” she said.
“What we did was say, look, there are people who have 29 years and a half of service; can you give us six more months so they can reach the 30 years in service,” she explained. “But this will take another two years and the plan is not effective until the Social Security for teachers begins to get paid.”
For example, Díaz said, some educators will have a life pension (pension vitalicia) of some $820. They will also receive Social Security benefits plus the money that have saved in a 401(k) plan. “Also, if this agreement is approved [by the teachers] they will receive a bonus when the agreement is signed.”
The exact figure of the bonus will fluctuate, Díaz said, depending on the number of years of service.
Díaz will now take the provisional agreement to different island regions where she will speak with educators, and if they agree the measure could be voted on June 10.
“We are not going to tell them how to vote,” she said. “This is a very personal decision because their future is at play,” adding, “we are negotiating for the active teachers, not those that are already retired, so they have a guaranteed pension when they do retire.”
Furthermore, Díaz said that when former Gov. Alejandro García Padilla offered about $1,600 a month in teachers pensions, she should have accepted the offer if it included adding Social Security benefits.
“But he didn’t specify that we would get Social Security benefits,” Díaz said. “The Financial Oversight and Management Board is negotiating this with the Social Security Administration.”
The executive director of Puerto Rico’s Fiscal Agency and Financial Advisory Authority (Fafaa by it Spanish acronym), Christian Sobrino, said in a statement, that Díaz “today has indicated that it is the legal position of her organization that the obligation of the government with the retirement of its teachers is an unsecured obligation in the bankruptcy process.”
“Since 2017, Gov. Ricardo Rosselló, our Legislative Assembly and FAFAA have argued the complete contrary,” Sobrino said. “The position of the Teachers Association is tantamount to a total surrender of our retirees in exchange for nothing. We vehemently reject the position of Ms. Díaz and her organization that our pensioners deserve no further consideration in the bankruptcy process than any other unsecured creditor. This position is dangerous and threatens our pensioners without consideration of the basic principles of our jurisprudence on this matter.”
Meanwhile, Rosselló tweeted that “we will defend our retirees and their pensions.”
“To the unions: It is not an option to be the board’s accomplices to justify an additional blow to the retirees, betraying those they allege to represent. We are firm in our defense of the pensions in Puerto Rico.”
—Eva Lloréns Vélez contributed to this report.