Attention: Government Retirees

Dear Retirees,
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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.
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Sincerely,
Your Retiree Committee