GUAM has its own problems and likely few of us noticed this past summer when our cousins in the Commonwealth of the Northern Mariana Islands captured the world's attention.

On the heels of the financial meltdown of European countries like Greece and the bankruptcies of California cities, the CNMI government retirement system became the first U.S. public pension fund to seek bankruptcy protection and fail.

The CNMI financial crisis reverberated around the world because American cities, U.S. states and European countries spent the past summer similarly scrambling to refill employee retirement systems drained by losses. In September 2007, the CNMI fund had $510 million in assets. By 2008, it had lost $115 million on its investments.

About 10 years ago, the economy of the CNMI started to collapse. Large garment factories left the islands and the government's tax revenue started to dwindle. As a result, the government started paying less and less into the pension fund. In 2006 and 2007, the government suspended its payments into the fund. Officials estimate that pension money could run out by 2014.

For years, CNMI government officials had expanded pension perks but then failed to make appropriate contributions. Despite decreasing contributions, the pension fund continued to disperse preposterously generous benefits. The pension fund allegedly pays benefits to an employee's spouse and children long after the employee has died. Apparently, one retiree adopted 10 of his grandchildren and great-grandchildren so they could qualify for pension payments after he died.

Then, CNMI officials outright raided the pension fund. The fund lent money to islanders to buy homes and to the government to upgrade a courthouse. Today, about half of the home mortgages the pension fund doled out are delinquent. Reportedly, the pension fund has a lien on the Saipan courthouse because its loan is also delinquent.

Because many CNMI residents did not pay into Social Security, many government retirees do not have access to Medicare. This means that any impending retirement income cuts may be devastating to the medical care of thousands of CNMI retirees and their families.

Similarly here on Guam, there is a generation of GovGuam employees who did not pay into Social Security, survive on a fixed income, and find increasing medical costs forcing them into financial ruin. The need for Guam and the CNMI to find real fixes for the ongoing retirement fund disasters is a matter of dollars and common sense.

The GovGuam Retirement Fund trustees should be cautious about increasing the liabilities of our government by moving Direct Contribution (DC) participants back into the pension fund without a proper funding mechanism. In order to reduce the GovGuam burden, remove the DC plan from the oversight of the Retirement Fund board. Set up a new board just for DC and work to optimize Social Security benefits plus DC investments.

This is the system by which almost all private sector physicians live by and it should be good enough for government retirees. The CNMI should follow this new GovGuam model and ideally, both governments would work cooperatively. Making false promises and then hiding behind the bankruptcy shield has proven to be a non-option. Prudent governance is now our only true choice.