WITH the revelation that former Speaker and current Government of Guam Retirement Fund Chairman Joe T. San Agustin “went rogue” in obtaining legislative approval of an increase in survivor benefits, San Agustin’s credibility as chairman of the board is critically weakened.
With legislative battles looming next month over Gov. Eddie “Pepsi” Calvo’s proposed raids on the Fund – allowing 500 employees to retire early and extending the Unfunded Liability Amortization period by 10 years – the board should move immediately to replace San Agustin with someone whose authority to speak for the board will be unquestioned.
San Agustin should also be replaced because he cannot credibly claim to speak for the interests of all members of the Defined Benefit Plan, both current retirees and future retirees. Rather, by his actions, San Agustin has shown that he favors the interests of a cohort of current retirees of a certain life expectancy, and their survivors and children.
I am referring to:
- San Agustin’s support of the Health Insurance Bailout of 2011, by which San Agustin acceded to Pepsi’s demands that the government’s contributions to the Fund be reduced for four months – presumably in response to Pepsi’s threats to reduce health insurance coverage for current retirees;
- San Agustin’s support of Bill 453-31, creating the so-called Hybrid Plan, which would allow members of the Defined Contribution Plan (new plan) to transfer to the Defined Benefit Plan (old plan) and draw benefits from the Retirement Fund at age 65; and
- The floor amendment to the 2012 Budget Bill, which increased benefits for survivors.
All these actions have a common theme – favoring the interests of current retirees (or, in the case of the proposed Hybrid Plan, the interests of DC Plan members 65 years or older), to the detriment of those DB Plan members not yet retired or not yet having attained retirement age under the Hybrid Plan.
All these actions will increase, or have increased, the Unfunded Liability, the consequences of which will fall on those not yet retired, but who may be expected to still be alive when the Fund runs out of money. In short, San Agustin’s actions have exacerbated the Ponzi-like distribution of benefits from the Fund, wherein those who joined the Defined Benefit Plan late subsidize those who joined the Plan early, leaving nothing for those latecomers when it comes time for them to retire.
Given his record, is San Agustin the person to lead the board in its upcoming battle with Pepsi over its proposed raids of the Fund – the raids incorporated in Pepsi’s Spending Cuts Bill, aka the Omnibus Budget Reform Act of 2012? How can San Agustin credibly object to Pepsi’s raids on the Fund when he himself has supported raids on the Fund?
The board of trustees of the Government of Guam Retirement Fund needs to get itself a new chairman.
Guam and the Philippines