In recent days, some of you have received a Joint Notice from the Federal Court to request an order for the approval of the process to vote on and confirm the Adjustment Plan in the bankruptcy of the Government of Puerto Rico under Title III of PROMESA.

This document is part of the normal bankruptcy process. Retirees from the Central Government, Teachers and Judiciary retirements systems DO NOT HAVE TO TAKE ANY ACTION on this document. The Official Committee of Retirees, appointed in June 2017 by the Office of the United States Trustee, represents the collective interests of retirees in all pension matters and is closely monitoring the Court's actions in the case. You can rest assured that the COR will keep you informed and tell you when they need to take action.

On the other hand, the Federal Court issued an order allowing the Board of Fiscal Oversight, on behalf of the Government of Puerto Rico, to request certain information from the active employees  and inactive participants (former employees that did not take out their individual contributions)  of the Employees, Teachers or Judiciary retirement system, prior to the confirmation of the Plan of Adjustment. The information that will be requested, among other things, includes mailing address, years of service and employment information, in order to be able to send you the package with information and materials (including ballots) to vote on the Adjustment Plan.
 

• The tentative agreement protects 61%, or over 102,000, of all current retirees from any cuts
• Limits pension cuts to a maximum of 8.5% for retirees with monthly retirement benefits of more than $1,200, as opposed to a maximum of 25% cuts proposed by FOMB

 
The Official Committee of Retired Employees of the Government of Puerto Rico (COR, for its acronym in Spanish) has reached a tentative agreement with the Financial Oversight and Management Board for Puerto Rico (FOMB) that 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.  Retirees with monthly pension benefits below $1,200 will receive 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 $1,200, the agreement will limit reductions to a maximum of 8.5% and will ensure a minimum monthly post-cut pension benefit of at least $1,200.  As noted in COR’s open letter to retirees, Social Security benefits and the monthly medical insurance benefit for those who receive it will be fully protected. Covered under this tentative agreement are the retired employees from the Employees Retirement System of the Government of Puerto Rico, the Teachers Retirement System, and the Judiciary Retirement System.

“After almost two years of legal actions, mediation sessions and negotiations we reached an agreement  with the FOMB that will significantly limit pension cuts and provide other substantial protections,” said former judge, Miguel Fabre, chairman of the COR.

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. Major highlights of the tentative agreement include:

• Raise in the minimum pension threshold to calculate cuts from $600/month to $1,200/month, increasing the number of retirees who are completely protected from pension cuts, from 25% (45,000 retirees) to approximately 61% (102,000 retirees).
• Certainty that cuts to monthly pension benefits will not exceed 8.5% vs. 25% as proposed by the FOMB
• Guarantee that Social Security benefits will not be affected by any cut.
• Protection of the medical insurance monthly benefit for those who receive it.
• Protection for future PayGo payments. Under the agreement, there is a provision for the creation of a potentially multi-billion-dollar pension reserve fund to help fund pension payments in later years, when the fiscal plan projections reflect operating deficits for Puerto Rico. 

• Assurance that if Puerto Rico’s economy exceeds the financial projections in the fiscal plan by a certain level in a given year, retirees whose pensions were cut will get a portion of cuts restored for that year.
• Cuts would not occur until July 1, 2020, at the earliest.
• Creation of an independent board, consisting of retirees who will be elected by retirees, to supervise the reserve fund, PayGo payments, and compliance with the terms of the pension benefit agreement included in the Fiscal Plan.

 
“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. Under the circumstances, the COR is convinced that this agreement is the best option to ensure the well-being of our community and the continuity of our pensions,” stated the COR’s chairman.

The proposed agreement will be included in the Commonwealth’s Plan of Adjustment (POA) under Title III of PROMESA, which will be subjected to the vote of impaired creditors at a later date that will be announced by the federal court. The COR will provide information at the appropriate time regarding voting on the POA.  Said plan will then be considered for confirmation by Judge Laura Taylor Swain, who is in charge of the Puerto Rico’s bankruptcy proceedings under Title III.

“It is important to emphasize that pensions cannot be modified until at least the time when the Court has confirmed a POA for Puerto Rico,” Fabre indicated. Said confirmation will take place after the affected parties have evaluated details of the POA and voted in favor, or against it.

The COR will be engaging with retirees to offer additional information about the agreement and its impact on retirees, and the voting process. It is important to stay up-to stay up-to-date with the latest information, register in www.porturetiro.com or follow Comité Oficial de Retirados on Facebook.


About the COR
The COR was authorized and appointed in June 2017 by the United States Trustee to represent the collective interests of more 167,000 government retirees from the Employees Retirement System of the Government of Puerto Rico, the Teachers Retirement System and the Judiciary Retirement System in Title III cases to restructure Puerto Rico’s debt, under federal law PROMESA.
 

Dear Retirees,
​
For the past two years, our Retiree Committee, which was appointed to represent 167,000 retirees from the Employees Retirement System, the Teachers’ Retirement System and the Judiciary Retirement System in Puerto Rico’s PROMESA Title III case, has worked diligently to minimize the impact of this bankruptcy process on our retirement benefits.

In pursuit of that goal, as you know, our Committee has been involved in negotiations with the Financial Oversight and Management Board (FOMB) regarding Puerto Rico’s Plan of Adjustment and how our retirees will be treated under this Plan.  It has been our belief that, in the first instance, it is in the best interests of all pensioners that we engage in such negotiations and that to not negotiate merely benefits other creditor groups that may be willing to engage in negotiations with the FOMB.
 
While any pension cuts are regrettable, we believe it is in our best interest to find a path, under a confirmed Plan of Adjustment, that treats pensioners fairly and helps our island emerge from this bankruptcy process as strong as possible.
 
To that end, we wanted to share with you that we are quite close to reaching an agreement with the FOMB which we believe will provide significant protection to retiree pensions, if it is successfully made a part of an acceptable Plan of Adjustment that is approved by the District Court. Certain aspects of our tentative agreement include:

• Protecting 61% of all current retirees from having to experience further reductions in their monthly pensions, an increase from the 25% proposed by the FOMB in its October fiscal plan. This means that over 102,000 retirees would be protected from cuts under our proposed agreement – over 60,000 moreretirees than would be protected under the FOMB’s plan. On an aggregate basis, approximately 74% of all active employees and retirees holding accrued benefits would be completely protected.

 

• Guaranteeing Social Security benefits would not be affected.

 

• Ensuring that monthly contributions towards medical insurance benefits would not be affected.

 

• Ensuring that those retirees who would be subject to cuts would experience significantly smaller reductions vs. the certified fiscal plan.

 

• Assuring that retirees are protected against any future attempts to cut accrued pension benefits.

 
We wanted to share these aspects of our proposed agreement with you to provide some comfort that we are moving in the right direction and are close to a resolution that treats us fairly and provides certainty to our pensions.  The government has expressed the desire for no cuts to pensions, and we agree – and, as described above, the agreement we are negotiating results in no cuts to a significant majority of pensioners and provides substantial protections to all pensioners.
 
You have our commitment that we will continue to act in your best interest and that as soon as we are able to do so, we will share additional information.
Thank you for your continued trust and support as we work to ensure the best outcome for our retiree community.
​
Sincerely,
Your Retiree Committee

​On March 26, 2019, the First Circuit Court of Appeals affirmed the District Court’s January 30, 2018 order dismissing the complaint filed by certain general obligation bondholders (GO Bondholders) in the ACP Master, Ltd. adversary proceeding.

In their complaint, the GO Bondholders claimed that they had a priority and property interest in certain government “restricted revenues” and sought, among other relief, a declaratory judgment that those revenues could be used only to pay the GO Bondholders.

The Official Committee of Retired Employees of the Government of Puerto Rico (COR) intervened to assert arguments on behalf of the retirees.

The COR argued in court filings and oral presentations in both the District Court and the First Circuit that the GO Bondholders’ lawsuit should be dismissed because it was premature, an improper attempt to end run the plan of adjustment process under PROMESA, and an improper interference with PR’s exercise of its governmental powers.

The First Circuit’s opinion affirming the District Court incorporated many of the COR’s arguments.

The COR represents 167,000 government retirees and will continue to advocate for the interests of retirees. The COR invites all retirees of the PR government to follow www.porturetiro.com or the COR’s FB page to stay informed about the potential impact of Title III proceedings over pension and pension benefits; and the eventual presentation of a Plan of Adjustment.

For more details on the lawsuit and District Court’s opinion click here or download the attached document.

​On February 15, 2019, the United States Court of Appeals for the First Circuit ruled that the members of the Financial Oversight and Management Board (FOMB), created under PROMESA, were unconstitutionally appointed because they were not nominated by the President of the United States and confirmed by the United States Senate. It is important to note that this ruling did not dismiss the Puerto Rico bankruptcy proceedings under PROMESA’s Title III. Also, the ruling also did not invalidate the FOMB’s actions to this date, and it expressly states that it does not impact the validity of the Board’s prior actions. Moreover, the First Circuit directed that its decision would not be implemented for 90 days, and held that the FOMB may continue to act during said 90-day period.
 
It is possible that both sides of this case -the FOMB, and the bondholders, who sought dismissal of the Title III cases- may ask the Supreme Court to review the decision, as neither side received everything it asked for from the First Circuit. A petition asking the Supreme Court to review the case would be due within 90 days, unless an extension is sought. If the Court were to grant the petition and hear the case, it might not hear arguments or reach a decision until the next term, which starts in October 2019, although it is possible that the Supreme Court could expedite the process. If the Supreme Court agrees to hear the case, the it could continue the stay to allow the existing Board members to continue to act.  
 
The Official Committee of Retired Employees from the Government of Puerto Rico (COR, for its acronym in Spanish) will continue analyzing the impact of this decision on retirees and what it means for Puerto Rico’s financial future. The Retiree Committee  is the voice of the Commonwealth’s 167,000 retirees and represent their unique important interests as the largest creditor group in the Title III cases. In the meantime, it is important to remember that this decision does not change pensions, or the fact that pensions cannot be modified in any way until Judge Swain, in charge of Title III cases, confirms a plan of adjustment for the Government of Puerto Rico.
 
It is now more important than ever, that you visit www.porturetiro.com and register in our Information Directory -free of charge and confidentially- to receive information regarding the status of the FOMB and PROMESA in matters related to your pension and pension benefits.

San Juan, Puerto Rico – The Official Committee of Retired Employees of the Commonwealth of Puerto Rico (ORC) is disappointed by the ruling of the First Circuit Court of Appeals yesterday, determining that ERS bondholders held a perfected lien in “Pledged Property” prior to the commencement of the ERS Title III case on May 21, 2017. 

Miguel J. Fabre Ramírez, chairman of ORC said that “this ruling, however, preserves numerous important issues for determination by Judge Laura Taylor Swain at the District Court. Fabre also stated that “in particular it has not been determined that any pre-Title III lien of the bondholders applies to any property of the PayGo system or any property of ERS acquired after the Title III case began on May 21, 2017.  If the lien does not apply to such property, then the lien can only be asserted potentially against the limited assets that the ERS held as of May 21, 2017, and application of the lien would still require the bondholders to establish that those assets are part of, or proceeds of, the Pledged Property that is collateral for the lien; if the bondholders cannot establish these facts, then the lien cannot be applied”. 

The Retiree Committee will continue to advance all appropriate legal arguments regarding these matters before the District Court and all appellate courts, to protect the interests of ERS retirees and their beneficiaries.

About the COR
The COR, which was appointed by the U.S. Trustee in June 2017, represents government retirees in Puerto Rico’s Title III case under federal law PROMESA. The COR represents the collective interests of pensioners from the Government Retirement System, the Teachers’ Retirement System, and the Judiciary Retirement System.

​In August 2018, the District Court issued an Opinion and Order holding that the ERS Bondholders’ asserted liens on ERS assets (which the ERS Bondholders contended secured more than $3 billion in debt) were not perfected and could be avoided (i.e., disqualified) by the Financial Oversight & Management Board (FOMB). The ERS Bondholders appealed the District Court’s Order to the First Circuit.

On October 19, 2018, the COR filed a brief in that appeal in which it argued that the District Court’s decision should be affirmed, both because the ERS Bondholders’ liens were not perfected and because PROMESA and applicable Puerto Rico law give the FOMB the ability to avoid the ERS Bondholders’ asserted liens. The First Circuit is expected to hear oral argument on the appeal. 

​The COR will continue to keep the retiree community updated on this important appeal.  A copy of the COR’s brief is here:

San Juan, Puerto Rico – [October 23, 2018] Today the Fiscal Oversight and Management Board for Puerto Rico (FOMB) certified a new Fiscal Plan for the Commonwealth Government. The Board’s latest Fiscal Plan includes the pension reform measures set forth in prior fiscal plans which calls for a 10% average reduction to pensions, and in some cases, much more.

Miguel Fabre, Chairperson of the Official Committee of Retired Employees of the Government of Puerto Rico (COR, for its acronym in Spanish) said, “the COR is disappointed that the FOMB continues to propose fiscal plans that fail to adequately fund pensions and thus comply with PROMESA’s requirement.

​Explaining the impact of the Fiscal Plan, Fabre stated: “It is important for retirees to understand that the Fiscal Plan itself does not implement pension reductions. Pension reductions can only be implemented through a Plan of Adjustment confirmed by the District Court, and the COR will continue to advocate  and defend the rights of the 167,000 government service retirees in Puerto Rico’s Title III cases before the District Court.”

About the COR
The COR, which was appointed by the U.S. Trustee in June 2017, represents government retirees in Puerto Rico’s Title III case under federal law PROMESA. The COR represents the collective interests of pensioners from the Government Retirement System, the Teachers’ Retirement System, and the Judiciary Retirement System.