Pensions in Paradise

NPR’s Caitlin Kenney reports:

Ruth Tighe is [a] former employee of the commonwealth’s energy office. She says the law that allowed her to retire with so little government service should never have been passed.

She’s referring to the pension plan of the Northern Mariana Islands. The small U.S. Commonwealth was once known for having the most-generous government pension plan in the country. You could work for the government for just 3 years and then retire with a pension at age 62.

When hard times hit in 2006 and 2007, the government stopped paying into the fund. Now the fund is trying to declare bankruptcy. Since states and territories are not allowed to declare bankruptcy, the legal question turns on whether the pension and the Commonwealth are one and the same or whether the pension can be considered a separate entity.

Pension managers on the mainland are closely following the case. So should pensioners. As Ms. Tighe’s story indicates, unsustainable promises benefit no one, least of all those who come to depend on them.

Tagged as: Caitlin Kenney, Northern Mariana Islands, pension, Pensions, Ruth Tighe