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  • Writer's pictureThe San Juan Daily Star

UPR looks to have retirement system board’s lawsuit moved to federal court


The University of Puerto Rico Retirement System sued UPR and its governing board’s president on May 11 in local court, alleging that the UPR had illegally created a second retirement system.

By The Star Staff


The University of Puerto Rico (UPR) is seeking to have a recent lawsuit brought by its retirement system’s board moved into federal court, according to a recent notice of removal.


The UPR Retirement System sued UPR and its governing board’s president on May 11 in local court, alleging that the UPR had illegally created a second retirement system when it closed the pension plan to new members and opened a defined contribution plan for new members. They argued that the law allowed UPR to have only one retirement plan and asked that the court prevent reform implementation.


As part of the UPR Fiscal Plan, the Financial Oversight and Management Board established two potential paths for the UPR to reform the UPR Retirement System. The first option was to freeze the existing retirement plan and move to a defined contribution plan with no reduction in accrued benefits. The second option was to freeze the existing plan and move to a defined contribution plan coupled with a reduction in accrued benefits.


Furthermore, as part of UPR’s fiscal year 2023 budget, during the fiscal year the UPR must adopt pension reform “in which the defined benefit plan is frozen and a defined contribution plan is implemented” or otherwise must find an additional $11.9 million in savings for fiscal year (FY) 2023 and would not receive an additional $20 million in funding which are conditioned upon such pension reform milestones. Accordingly, the UPR moved to implement pension reform, selecting an option that did not reduce benefits.


The retirement system board seeks, among other things, a declaratory judgment that the proposed pension reform is arbitrary and illegal.


The retirement system did not include the oversight board as a defendant and argued that UPR wasn’t an entity that had been restructured, so the case could be heard in local court. Although UPR has not filed for bankruptcy, it argued that the case still belongs in the federal court overseeing the commonwealth’s Title III bankruptcy proceeding.


“If plaintiffs’ requested injunctive relief were to be granted, the UPR and its governing board would be enjoined from implementing the pension reform,” the notice of removal argued. “This outcome will have severe adverse economic consequences for UPR under the FY23 budget.”

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