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  • Writer's pictureThe San Juan Daily Star

PREPA retirement system officials at odds over data, communications on pension funds

Financial Oversight and Management Board Executive Director Robert Mujica

By The Star Staff

Financial Oversight and Management Board Executive Director Robert Mujica said late last week that the directors of the Puerto Rico Electric Power Authority (PREPA) and members of the PREPA Employees Retirement System (SREAEE by its Spanish initials) gave him erroneous information on at least two occasions about the situation of the utility’s retirement fund.

The SREAEE president denied the allegation on Monday, adding that the entity has made proposals to the oversight board, also known by its initials FOMB, to deal with the crisis in the retirement system that the board has ignored.

“This information came from PREPA or the Retirement System; I don’t remember now who had to carry out the actuarial analysis of how much was owed,” Mujica said at a press conference on Friday. “And in different instances, they presented different analyses. It may be due to inflation costs and the numbers changed significantly on two occasions.”

“For this reason, we assumed that the pension funds would be properly insured until mid-2024,” he said. “But then they notified the government and us at the same time that they were short of money, so we had to act so that they do not lose a single cent.”

José R. Rivera Rivera, chairman of the SREAEE board of trustees, said in February that the actuarial deficit of the pension system as of June 2021 was over $3 billion. In 2022, PREPA was supposed to contribute 166.38% of the total payroll, or $23.8 million per month, but it has yet to make payments to the pension system.

As of December 2022, PREPA owed the SREAEE $895 million in delinquent pension payments. Meanwhile, agencies that took former PREPA employees following the LUMA Energy takeover of the transmission and distribution system owed the system over $8 million.

Rivera said at the time that the system is slated to become insolvent next month.

Mujica said PREPA funds were identified that include debts receivable, which guarantee payments to pensioners. However, there were also changes in the amount to be paid monthly, he said.

“They are paying around $30 million. But a few weeks before we were told it was $22 million, and the number kept changing. Now we are at $30 million,” Mujica said. “The funds come from PREPA itself. Initially, they found the funds within their budget. There is another controversy over other funds owed to PREPA. There are debts from other agencies that owe PREPA and have not paid. We went to those funds and determined that there is money that is owed to them and some that we are not sure about. Those funds that we are sure are owed allow us to pay pensions until October. These funds will help us pay pensions while the debt adjustment plan is approved.”

Johnny Rodríguez Ortiz, the SREAEE president, refuted claims by oversight board officials that they were unaware of the true crisis that the PREPA retirement system is going through because since November of last year they were informed by way of letters, copies of the actuarial reports and specific proposals of the need to prevent the system’s insolvency.

“Retirees demand justice, that the FOMB should stop distributing money to LUMA and Genera PR when the FOMB knows that they owe millions to our retirement system,” Rodríguez Ortiz said. “Likewise, we demand that the FOMB stop lying to the people of Puerto Rico or retirees, when they said that they did not have reliable official data to make decisions. That is a big lie.”

He said the only reality is that “the fiscal oversight board and the [power] authority have failed to comply with PROMESA [the Puerto Rico Oversight, Management and Economic Stability Act], which requires that the fiscal plans certified by the board provide adequate funds for the payment of pensions.”

“The board of trustees of the PREPA retirement system has raised this non-compliance with the PROMESA law to the fiscal oversight board and its advisers without obtaining an appropriate response to date,” Rodríguez Ortiz said.

He said that on Nov. 17, 2022, the SREAEE board of trustees submitted a proposal to the oversight board for managing the crisis of eroding SREAEE funds, but that the oversight board to date has ignored the proposal.

“If this proposal is adopted, it would allow the SREAEE to remain solvent without changes in the rights and benefits of its members and retirees,” the SREAEE president said.

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