Teachers’ groups, credit unions to challenge debt adjustment plan
By The Star Staff
Several teachers’ organizations and credit unions announced in documents filed with the local federal court that they will be challenging in the U.S. First Circuit Court of Appeals the debt adjustment plan that would restructure some $33 billion in government debt.
The Teachers Federation of Puerto Rico, Educators for Democracy, Unity, Change, Militancy and Union Organization Inc. and the National Union of Educators and Education Workers informed the Title III Court of their appeal against the debt deal announced Jan. 18 as it freezes their benefits starting March 15, when it goes into effect. Over the weekend, various teachers’ groups held protests across the island over the loss of benefits.
The teachers were informed by the Retirement System over the weekend that the debt adjustment plan calls for all retirement participants to be automatically enrolled in a defined contributions retirement plan established by Act 106 of 2017.
All teachers will be eligible for Social Security benefits.
Those Department of Education teachers hired before Aug. 1, 2014, or those subject to Act 91 are enrolled in a Defined Benefits Program, but those benefits “will be frozen when the plan of adjustment goes into effect,” the Retirement System Board said in a memo.
Teachers who are 60 years old by the time the benefits freeze goes into effect on March 15 and have at least 10 years of service or are at least 47 years old and have 25 years of service, will be able to retire any time. The memo then provides a list as to how much in benefits a teacher will receive when the March 15 benefits freeze goes into effect, an amount that will vary according to age and years of service. For instance, a teacher who is 50 years old and has 30 years of service by March 15, will be able to retire with 75% of what he or she made in salary. But all pension amounts will be calculated based on the years of service and age of the teacher as of March 15. Teachers who are younger than 45 will be enrolled in Social Security automatically but those who are over 45 years old and less than 60 years old can choose between Social Security or a government pension.
Besides the teachers, several credit unions such as the Cooperativa de Ahorro y Crédito Abraham Rosa, Cooperativa de Ahorro y Crédito de Ciales, Cooperativa de Ahorro y Crédito de Rincón, Cooperativa de Ahorro y Crédito Vega Alta, Cooperativa de Ahorro y Crédito Dr. Manuel Zeno Gandía, and Cooperativa de Ahorro y Crédito de Juana Díaz also announced they will be appealing the confirmation of the debt adjustment plan.
Early in January, Title III Bankruptcy Judge Laura Taylor Swain dismissed a complaint filed by several credit unions that had accused the government of leading them into buying Puerto Rico bonds, knowing it was not going to pay the debt. They alleged that defendants engaged in a fraudulent scheme from 2009 to 2015 to coerce cooperatives into buying government bonds while defendants knew that the bonds were unsustainable and would diminish in value. The credit unions wanted the judge to decline to discharge their debt as part of the bankruptcy. The judge said there was no evidence to sustain the charges.
The notices of appeal were filed last week.