(Bloomberg) — Puerto Rico Governor Pedro Pierluisi is ready to argue earlier than the court docket overseeing the island’s file chapter case that public worker pension funds ought to be left intact and never decreased.
The governor sees the difficulty of Puerto Rico’s broke pension system that owes present and future retirees an estimated $55 billion as separate from the commonwealth’s plan to restructure $22 billion of bonds. Nonetheless, U.S. District Courtroom Decide Laura Taylor Swain will weigh in on whether or not to chop pensions and by how a lot.
“I’ll make my case earlier than the court docket when the time comes arguing in favor of not having any pension cuts,” Pierluisi stated Friday in a cellphone interview. “I hope that the choose will see this concern my approach.”
Puerto Rico’s monetary oversight board, which manages the chapter, needs the island to finish its restructuring course of by the tip of 2021. The board is proposing slicing some pensions by 8.5%, though no fee would fall under $1,500 a month. That may save Puerto Rico a median $63 million a yr for the subsequent 30 years, an quantity the commonwealth can simply afford to pay as soon as it restructures its bonds, Pierluisi stated.
Puerto Rico lawmakers anticipate submitting as quickly as Monday laws that will authorize new bonds to interchange current debt. It might additionally embody proposed pension cuts whereas on the similar time promising to pay retirees their full profit if there may be surplus income.
If the governor and island lawmakers move such laws, Swain could also be extra prone to approve the debt restructuring proposal and permit Puerto Rico to chop its obligations. It’s unclear whether or not Pierluisi would signal such a measure as he has stated public staff have already confronted decreased advantages by pension reform measures.
“If I’m satisfied that I can say with a straight face to all pensioners that the invoice ensures that they’ll be paid what they’re due, then I’ll haven’t any drawback with the invoice and I’ll signal it,” the governor stated.
Pierluisi and the legislature have an Oct. 4 deadline to move a debt restructuring invoice, as that’s when bondholders might be ending voting on the board’s debt restructuring plan.
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