Puerto Rican authorities have reached a tentative agreement that would reduce or eliminate proposed cuts to pension benefits for 167,000 retirees, as the US territory works to exit its years-long fiscal crisis.
In a statement, the committee for retired government employees (COR) said it had reached the deal with Puerto Rico’s financial oversight and management board (FOMB) to significantly limit the cuts.
The deal “will substantially improve the treatment of retirement benefits of 167,000 retired government employees as compared to the terms proposed by the FOMB in the latest fiscal plan approved in May 9, 2019,” according to the statement.
“The tentative agreement negotiated by the COR marks significant progress from the terms proposed by the FOMB, which would have affected 75% of the retiree population in Puerto Rico.”
Under the plan, retirees with monthly pension benefits below US$1,200 will see no cuts at all, resulting in the full protection of 61%, or over 102,000, of all current retirees.
For those retirees with monthly pensions of more than US$1,200, the agreement will limit reductions to a maximum of 8.5% compared to the 25% proposed by the FOMB and will ensure a minimum monthly post-cut pension benefit of at least US$1,200.
US social security benefits and the monthly medical insurance benefit for those who receive it would be fully protected, According to a COR letter to retirees.
“Although, the COR would have preferred no cuts, we believe that significantly worse cuts would have been sought by the FOMB in the bankruptcy process and that ignoring said reality would have been irresponsible from our part and lethal to our community of retirees,” said COR chairman Miguel Fabre.