After clashing with the Financial Oversight and Management Board of Puerto Rico (FOMB), Gov. Pedro Pierluisi introduced today two bills as an alternative to the Dignified Retirement Act, with aims to protect retirees from pension cuts.
"I present these measures as a solution to the current impasse. That the Board insists on its part in the cuts to pensions and in not providing a fair retirement, the only thing it will lead to is a deadlock in the debt's restructuring," the governor said.
According to Pierluisi, the two bills he presented before the Legislature are "far better than what the Board proposes, and are a realistic solution amid the government's bankruptcy."
One of the bills proposes the creation of the Zero Cut to Pensions Act and establishes as public policy of the government of Puerto Rico that pensions will not be reduced through the Debt Adjustment Plan proposed by the Board before the Title III Court. The measure proposes that, instead of dealing with pension obligations within the framework of the Adjustment Plan, they be addressed through the budget process and the fiscal plan established by Title II of the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA).
The legislation would amend the Organic Act of the Office of Management and Budget to establish that the payment of public pensions will have priority over other disbursements of public funds when the available resources are not sufficient for the budgeted allocations for that year. It would have a fiscal impact of $1.5 billion for the next 20 years.
"Basically, we are telling the Board that we respect the payment priority that the restructured debt will have in the bankruptcy process, and that pensions would come above all other priorities, raising the priority of pension payments as a public policy," the governor stated.
The second proposal seeks to protect the pensions of public employees who have been working in the government of Puerto Rico for more than 30 years, and who entered public service before 2000 with the expectation of a defined pension.
This proposed 'Guarantee the Right to a Fair Pension' Act reiterates the public policy of no budget slashes of public employees' pensions, and states that workers who have entered the Pension System in accordance with Act 447-1951 and Act 1-1990 have the right to a pension equal to 50 percent of their salaries when they retire from public service.
The measure establishes that these pensions would continue to be paid through the “pay as you go” mechanism established in Act 106-2017. Roughly 38,000 public workers would benefit from this measure.
"Government pensioners have already seen their pensions reduced by more than 20 percent, which has had a negative impact on the quality of life of these public servants. Our government made a commitment to them and we have to do everything possible to fulfill it," Pierluisi said.
Last week, the FOMB presented a lawsuit against Pierluisi, House Speaker Rafael "Tatito" Hernández, and Senate President José Luis Dalmau to halt the implementation of the Dignified Retirement Act, deeming it "incompatible" with the debt adjustment plan.
The governor added that he sent letters to the presidents of the legislative bodies informing them of the importance of addressing the protection of public pensions in light of the legal claim filed by the governing body, so he hopes they can address these measures in the ordinary session that begins next August.
Likewise, he addressed another letter to the members of the Board and its executive director, Natalie Jaresko, in which he notifies them about these alternative measures to Act 7-2021 and asks them to evaluate them objectively to achieve an agreement that is fiscally responsible and that protects the pensioners of the government of Puerto Rico.