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The delay in the flow of contributions of public entities that fund its retirees’ pensions, shows that the problem of the government retirement system is far from being resolved.

While promoting a definitive solution to the insolvency of the retirement fund, the government of Puerto Rico has to keep its word on its commitment to finance disbursements for its 161,000 former public employees through the General Fund. The Pay as you go plan - created in 2017 precisely to address the weak finances of the retirement system - demands a revision that protects retirees.

These pensioners would be affected if the new program to finance pensions fails. Their contributions nurtured the retirement systems of the central government, the judiciary and the teachers, with the understanding that they would have income guarantees at the end of their working careers. They should live with the peace of mind that they will receive the pensions to cover their needs.

 It is also necessary to highlight the possible consequences that insufficient funds for retirees would have on the three pillars of the Island’s fiscal recovery process. These are: the budget for fiscal year 2018-2019, the fiscal plan certified by the Oversight Board and the debt payment plan that would be approved by the Federal Court that deals with the bankruptcy case of Puerto Rico.

The strength of the  Puerto Rican financial recovery project lies on a structure of collections and disbursements that must be viable. The creation of favorable conditions for an economic revival that generates employment also depends on its correct execution.

 The failure of agencies, public corporations and municipalities to comply with their contributions for payments to retirees represents a heavy burden for the General Fund.  The government payroll, as well as public health and education programs, among other important services are paid with the collections that go to this Fund. Pensions up to $ 2.5 billion per year join this list.

Last year, before the insolvency of the retirement systems,  the Puerto Rican government committed to pay pensioners. In doing so, they sought to avoid the reduction in pensions proposed by the Oversight Board as part of the long-term fiscal plan.

Law 106 created the Pay as you go system. It distributes responsibility among agencies, public corporations and municipalities through reimbursements. Each entity must pay the pensions of its employees through the Pay-Go system.

 However, until last May, a score of public corporations had not issued payments to Pay-Go. Its debt amounts to $ 365.8 million. Meanwhile, municipalities owed $ 100 million, according to a report from the Fiscal Agency and Financial Advisory Authority (FAFAA). Some municipal governments allege that there are errors in the invoices sent to them by the Treasury. It is important to have these accounts clear, given income reductions in municipalities, such as the central government subsidy.

 The financing of many public entities is also tied to the central government. That is the case of the Medical Center, and the Metropolitan Bus Authority. New responsibilities, such as the payment of pensions, presents major budgetary challenges for public organizations. An important part of their responsibility is to establish priorities to comply with fundamental duties, such as payment to pensioners.

The government and its agencies have to evaluate and decide on the course of action that enables to pay their retirees pensions. It is a legal obligation and moral duty.

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