Oversight board warns gov't against enacting Dignified Retirement bill
The federal Financial Oversight and Management Board for Puerto Rico threatened to take the island government to court if it enacts into law House Bill (HB) 120, the Dignified Retirement Act, a bill that would prevent any cuts to pensions.
“The Oversight Board believes the passage and enactment of HB 120 would only lead to its nullification by the Title III court and subsequent administrative headaches to unwind the law,” states a letter dated Feb. 20 from Natalie Jaresko, the executive director of the oversight board, to Gov. Pedro Pierluisi Urrutia.
Jaresko said HB 120 purports to dictate the terms of a plan of adjustment (POA) for the commonwealth that the government would be willing to accept as a condition to cooperating to restructure the island’s enormous debt. The oversight board is proposing an 8.5% cut to pensions higher than $1,500 as part of a new debt adjustment plan, which is slated to be made public March 8.
The bill would eliminate all pension reforms contemplated by the Fiscal Plan (including the freeze of benefit accruals under the Teachers Retirement System and Judicial Retirement System and moderate cuts to benefits), along with essential reforms implemented under Act 106-2017, which created the current Pay as You Go system in which retirees are paid from the government’s General Fund.
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