Lawsuit filed over Puerto Rico pension problems
Another suit has been filed against Puerto Rico regarding pension mis selling. The government is accused of violating a law meant to protect the pensions of employees working in the public sector who have failed to invest over $300 million paid to a new retirement arrangement. Two labour unions have filed the case against the American common wealth’s government. The litigation case was filed in a US District Court in San Juan joining the long list of bankruptcy lawsuits against the board created by the federal government in May 2017 to restructure the over $120 billion debt owed by the Island to its workers in form of pension obligations and debt.
It is also the newest chapter in the adversarial relationship between the government and its public workers, especially teachers. The American Federation of State, County & Municipal Employees and the American Federation of Teachers refer to legislation 106 which was enacted in Aug 2017 requiring wage deductions from employees taking part in the new retirement plan to be put into segregated worker-controlled, 40(k)-type accounts that are yet to be created.
According to the unions that filed the suit, workers have not managed to invest the funds totalling to$316 million and they have missed out the higher stock market returns. The pension mis selling lawsuit also pointed out that the Commonwealth government is defrauding workers and hiding the funds anticipating that the government bank accounts at Banco Popular are not earning any interest. The lawsuit filed by the two labour unions also include thousands of public employees and teachers and is asking the court to find Puerto Rico to have violated its fiduciary obligations and other provisions of Law 106.
The case also seeks the unnamed amount of compensation for the massive loss of investment funds. The list of defendants is also long and includes the oversight board, the retirement board, fiscal and financial advisory authority, the treasurer, the chief financial officer, the governor of Puerto Rico, and Banco Popular. The oversight board is accused of failing to force the commonwealth government to abide by all the provisions enshrined in Law 106.
According to Natalie Jaresko, the executive director of the oversight board, the government of Puerto Rico is committed to creating the defined contributions within the shortest time possible. Other defendants have remained mum about the ongoing litigation. The case remains the ultimate hope for thousands of public employees and teachers in the Island. Experts and pundits in the industry are eager to see how the litigation unfolds in the coming months. The Commonwealth government of Puerto Rico has an uphill task of defending the case in the wake of increasing pension mis selling claims in America and the UK. Pundits and experts in the industry are also keen to analyse the industrial lawsuit as it unfolds.