Puerto Rico’s pension funds aren’t receiving the assistance they anticipated from a organizations for their new “PayGo” system, a plan that they adopted to maintain their payouts to beneficiaries.
The PayGo system eliminated employers’ contributions, contributions ordered by special laws, and the Additional Uniform Contribution in lieu of a system that bills public corporations, municipalities, the central government, the legislature, and the judicial branch a monthly charge to cover the benefits to pensioners.
But things aren’t really working out as intended, according to a report from the Financial Oversight and Management Board for Puerto Rico, an organization tasked with maintaining funding benefits for all retirees.
“It is very troubling that 20 municipalities and seven public corporations are also not remitting individual employee payroll withholdings for that employee’s defined contribution retirement account,” the report reads.
These municipalities and their associated debt to the system include San Juan ($72 million), Ponce ($10 million), Carolina ($8 million), Toa Baja ($6 million), Mayaguez ($2.6 million), Caguas ($3.3 million), and others.
Public corporations who haven’t paid their fair share include the Puerto Rico Ports Authority ($31 million), Metropolitan Bus Authority ($13.6 million), PRASA ($67 million), State Insurance Fund ($24 million), and a few others.
In aggregate, these organizations owe approximately $340 million to the pensions. The oversight board said they remain committed to ensuring benefits continue to be paid out to retirees, but are exasperated at the nuances of such an unanticipated practice.
“Continued payment of retirement benefits without reimbursement from these employees is an unauthorized expenditure under the certified budget and every effort must be taken to collect these delinquent debts or offset these incremental unbudgeted expenses within other areas of the budget,” the report added.
CIO reached out to a collection of representatives from these municipalities and companies regarding the situation, none of whom responded to questions by press time.
Puerto Rico’s governor and the oversight board have held significant debates in the past regarding pension reform initiatives and work to remedy the debt-ridden commonwealth’s much-needed economic reform plans.
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Tags: PayGO, Pension, Puerto Rico