UPR owes $59 million to its retirement system, whose board presents lawsuit
By Richard Gutiérrez
Before Puerto Rico starts paying off its onerous commonwealth debt, it must take care of a number of internal debts, including the University of Puerto Rico’s (UPR) debt with its retirement fund.
Members of the UPR Retirement System board have united to file a lawsuit against the university because of a lack of actuarial payments, salary reinvestments and actuarial reports. The debt exceeds $59 million and goes from 2015 to 2022. The lawsuit was originally filed on July 27 in the San Juan Court of First Instance.
On Tuesday, the board held a press conference to present the lawsuit to the island media. The board members contend the suit is necessary given the desire of the UPR governing board to close the benefits plan for newcomers to the UPR retirement system, replacing it with a new defined contributions plan that is similar to a 401k savings account.
Why is the board so concerned with the possible elimination of the benefits plan? Board members say the benefits plan has allowed thousands of retired UPR employees to have a worthy retirement.
“We have been trying to get the university to pay up the money that they owe the retirement board,” said Luis Vicenty Santini, president of the retirement board. “They don’t answer any of our demands, they don’t accept any payment plans or present any payment fixes, so we’re forced to push forward and take immediate action.”
The press conference’s main purpose was to expose the current state of the UPR retirement system to the entire island. When the STAR asked Vicenty why the UPR hasn’t paid the money it owes the retirement system, the retirement board president was not shy about telling the STAR that the UPR is being irresponsible with its payments on purpose.
“There is a current strategy that is focused on undermining the retirement system, to in a sense make sure that its solvency is affected in the future,” Vicenty said.
He said the board has had to make sacrifices to keep the retirement system up and running.
“We have been forced to sell investment assets in order to cover the cost of the operations regarding the retirement system of the UPR, because the UPR actively continues to fail with its employer contribution, with the payments that have been agreed to and the refunds for administrative spending,” Vicenty said. “It is highly contradictory and downright embarrassing that the UPR and its president, Luis A. Ferrao Delgado, and his governing board, insist on closing up the defined benefit plan, and they make public assurances that they are being responsible with their part of the contributions toward the retirement system while they have a never-ending debt of millions of dollars that only keeps getting more and more expensive over the years.”
The debt has built up since 2015 and the lawsuit states that on top of a $58.7 million debt with the retirement fund, the institution owes the retirement system trust money because of a lack of actuarial reports from various fiscal years, from 2017 to 2022, which adds up to $67,865 and a $100,455.39 debt, because of a lack of employer contributions.
Regarding the aforementioned salary reinvestments, Vicenty said the UPR has a $105,000 debt, all from salaries of the previous executive director of the UPR Retirement System from 2013 to 2019 for her additional work as investments principal in the Finance Office of the UPR central administration.
In terms of the sacrifices the trust has had to make, the retirement system has had to sell $8 million in investment assets in order to cover its needs, including loan disbursements and supplier payments, the system board president noted.
“It’s not a bad thing to sell investment assets, but we don’t have a choice other than to do it because the university wasn’t responsible with their contributions,” Vicenty reiterated. “We have to denounce them.”
All financial statements continue to demonstrate the solvency of the UPR Retirement System Trust after the retirement board assumed its fiduciary duty by legal ruling in October 2020, Vicenty said. However, given the nonpayment by the UPR, he warned that they must remain vigilant.
“The solvency of the UPR Retirement System is not only considered in the assets it has, but also in the contributions it receives,” Vicenty said. “If any of these variables, which are the contributions of the participants, the employer and the return on investments, is seen to be at risk or has a problem that is not corrected within a reasonable time, this causes damage to the future stability of the trust. The UPR knows this very well and that is why it is delaying payments, on purpose, so that it appears in the state financial [reports] as if we had no solvency and could justify the infamous attempt to close the defined benefit plan.”