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  • Writer's pictureThe San Juan Daily Star

Members appointed to Pension Reserve Fund oversight council

Wanda Santiago

By The Star Staff

Following the implementation of a central government debt adjustment plan (PAD by its Spanish acronym), the Retirees Committee has appointed the five members that will belong to a Pension Benefits Council created to oversee the Pension Reserve Fund created under the restructured commonwealth.

Separately, a monoline insurer announced that it cut down its exposure to Puerto Rico debt as a result of the restructuring.

On Tuesday, a new PAD that reduces the central government debt from about $33 billion to about $7 billion, went into effect, paving the way for an end to the commonwealth bankruptcy and overhauling government pensions.

The PAD creates a new Pension Reserve whose guidelines provide for the creation of a Commonwealth Plan of Adjustment Pension Benefits Council to ensure the Commonwealth of Puerto Rico’s compliance with certain provisions of the plan of adjustment related to the funding of the Pension Reserve Trust and to evaluate and address in accordance with the Pension Reserve Guidelines any requests by the commonwealth to withdraw funds from the trust.

In accordance with section 2.2.A of the Pension Reserve Guidelines, the Retiree Committee announced to the Title III Court the appointment of the retirees as members of the Pension Benefits Council.

The appointees are Carmen Haydee Núñez, a retiree from public service as the executive director of the secretary’s office of the Puerto Rico State Insurance Fund after 30 years of working in various positions for the Fund; Blanca E. Paniagua, who retired after 38 years of public service, including positions with the Puerto Rico Treasury Department and Puerto Rico Department of Social Services; Juan Ortiz Curet, who retired from the Puerto Rico Department of Education after serving as a teacher for 30 years; Wanda Santiago, who retired from public service as the executive director of the Teachers Retirement System after holding positions with multiple retirement systems of the Commonwealth of Puerto Rico, the Puerto Rico Department of Justice and the Municipality of San Juan; and Carlos A. Cabán, who retired as a Puerto Rico Appellate Court judge after previously serving as a Superior Court judge, Municipal Court judge, and regional administrator of the judiciary regions of San Juan and Humacao.

Assured Guaranty, meanwhile, announced that it paid claims on its insurance obligations and received cash, new general obligation (GO) bonds and contingent value instruments (CVIs) in accordance with the terms of the settlement agreement applicable to each bond issue.

Dominic Frederico, president & CEO of Assured Guaranty, said in a statement that the settlements are a huge step forward for Puerto Rico, and “we hope they provide momentum towards final resolution of the island’s bankruptcy.”

“They also bring Assured Guaranty closer to resolving its insurance exposure to Puerto Rico credits by removing $1.3 billion of net par from our insured portfolio, which represented 39% of our non-paying Puerto Rico insurance exposure at year-end 2021,” he said. “Assured Guaranty will continue to work constructively to complete the settlement process for its other non-paying Puerto Rico credits, and we hope that the current settlements will bring forward renewed respect for consensual agreements and the rule of law, and with it, access to the capital markets for Puerto Rico.”

The commonwealth PAD restructures some $33 billion of debt, including $1.2 billion outstanding of GO and PBA bonds insured by Assured Guaranty, as well as other claims against the government of Puerto Rico and certain entities, and $50 billion in pension obligations. In general, it provides for reduced annual commonwealth debt service payments and for the distribution of new GO bonds, cash, and CVIs to Assured Guaranty and other creditors. In this case, the CVI is intended to provide creditors with additional plan consideration tied to the outperformance of the Puerto Rico 5.5% sales and use tax (IVU by its Spanish acronym) receipts against the May 2020 certified fiscal plan projections, subject to annual and lifetime caps. To date, IVU receipts have exceeded the May 2020 projections.

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