FOMB

Pictured, FOMB members Andrew Biggs, Antonio Medina, John Nixon, David Skeel, and Arthur González.

The Financial Oversight and Management Board of Puerto Rico (FOMB) announced today that it filed a complaint against Gov. Pedro Pierluisi to nullify the "Dignified Retirement Act."

The Board's complaint was also filed against the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF by its Spanish acronym), as well as Senate President José Luis Dalmau and House Speaker Rafael Hernández Montañez, as representatives of the Legislature. .

The lawsuit was filed before the U.S. District Court for the District of Puerto Rico to enjoin the enforcement and to nullify Act 7-2021, which they claim would affect the restructuring process of Puerto Rico's public debt, among other affairs. In a missive, the FOMB contested that the recently-signed act is “significantly inconsistent” with the 2021 certified Fiscal Plan.

In addition, the entity claims that by signing the law, Pierluisi conceded that its enforcement would violate provisions under the Puerto Rico Oversight, Management, and Economic Stability Act. Specifically, the Board listed: ignoring the FOMB's autonomy, implementing a reprogramming of government funds without its approval, and "modifying billions of dollars of debt without Oversight Board approval."

"Act 7 must be nullified because it prohibits the Government from cooperating with any plan of adjustment at odds with the provisions of Act 7, including the Fourth Amended Plan of Adjustment filed on June 29, 2021. The Governor’s refusal to confirm that he will not implement the Act, and the Legislature’s refusal to repeal any portion of the Act leave the Oversight Board with no choice but to pursue litigation," the missive reads.

Act 7-2021, approved unanimously in the Legislative Assembly, establishes a public policy of “zero cuts” to the pensions of the retirement systems and to retired people from the public service, and creates the bases to establish a Trust for the Joint Administration of the Retirement Systems with which the payment of pensions would be ensured. It also establishes that the priority of paying pensioners must be established in the Debt Adjustment Plan.

The governor signed the law on June 9, and a lawsuit was expected to break out.

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