Fortuño only raises Retirement contribution; GDB admits more is needed

On December 12, 2011, the Centro de Periodismo Investigativo reported that, according to a Government Development Bank (GDB) financial document — a $400 million bond offer with which Fortuño was borrowing again — the measures in place were not enough for a real reform of the Retirement systems. The only bill submitted to the Legislature was an increase in the government’s contribution, which deferred the hole about three or four years; pre-increase evaluations projected the systems would start defaulting toward 2014.

The prospectus itself warns that, beyond that contribution, «improving the financial solvency of the Retirement systems will require adopting the other measures discussed» and will take several years. Among alternatives disclosed to bondholders: eliminate merit pensions (at 30 years of service), limit benefits legislated periodically, raise the retirement age, ban incentivized retirement windows unless they truly benefit the system — Law 7, for example, cost the systems $157 million —, eliminate retiree loans against their savings, and raise penalties on delinquent employers, municipalities such as Toa Baja and corporations such as the Medical Services Administration.

That list was broader than the recommendations Labor Secretary Miguel Romero presented on October 21, 2010 with the Commission for Retirement Systems Reform (actuaries Glenn D. Bowen and William B. Fornia, economists, legislators and retiree representatives). Additional contribution and debt offer ≠ complete reform or theft; insolvency projection ≠ disbursement already lost.

Source: Centro de Periodismo Investigativo. https://periodismoinvestigativo.com/2011/12/lo-que-fortuno-no-hizo-para-salvar-pensiones/