Senate bill would prevent cuts to pensions of PREPA employees
By The Star Staff
Senate President José Luis Dalmau Santiago introduced legislation that seeks to stop proposed cuts to the pensions of active and retired employees as part of the bankrupt Puerto Rico Electric Power Authority’s (PREPA) debt restructuring.
PREPA filed for Title III bankruptcy in 2017 through the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) to restructure some $9 billion in debt. Currently, the utility and its creditors are in negotiations for a new debt deal after a previous one negotiated in 2019 was canceled. The parties must present the new plan next month.
Dalmau Santiago said that as part of PREPA’s debt deal, the parties plan to cut pensions.
“Protecting pensioners is my priority. We did it with public servants in the debt adjustment plan [for the commonwealth] and now we have to do it with PREPA pensioners,” he said. “With Senate Bill 906, we ensure that over 15,000 families do not receive cuts to their pensions and do not see their household income reduced during one of the most dramatic inflationary periods in our history. The increase in the prices of food, medicines, health services and other basic services makes it increasingly unsustainable to justify cuts in our people’s pensions.”
The measure states that any debt agreement with creditors must guarantee the payment of pensions to PREPA’s active and retired employees. Likewise, it explicitly prohibits a hike in energy rates to justify defaults or cuts to pensions.
“We have to fight and be compassionate with our retirees,” Dalmau Santiago said. “We cannot allow them to live in the uncertainty of whether tomorrow they will be able to have enough to meet their basic needs and those of their family. I hope to be able to count on the consensus of all the political parties to work together for the public servants who have dedicated their lives to Puerto Rico.”
During the approval of the commonwealth debt adjustment plan last year, Dalmau Santiago said the Senate managed to approve by consensus language that avoided cuts to public servants’ pensions as proposed by the Financial Oversight and Management Board. The commonwealth debt deal, which went into effect March 15 and reduces the $33 billion debt by 80%, did not include a cut to the monthly pensions and created a reserve fund to ensure there is money to pay retirees through a “pay as you go” method.
Puerto Rico’s teachers and judges, meanwhile, are slated to be enrolled in the Act 106-2017 Defined Contribution Plan and become eligible for Social Security. Teachers and judges over 45 years of age had until May 13 to elect to be covered under Social Security.