Will my pension be reduced?
Under the agreement achieved by the COR, retirees with monthly pension benefits of $1,500 or less will not experiment cuts. If you have monthly pension benefits of $1,501 or more, the maximum reduction is 8.5%. Adjustments to pensions will not come into effect until 2022, at the earliest. Visit the pension calculator to find out how the proposed adjustment could impact your pension.
Why is my pension exposed to potential cuts as part of the bankruptcy of the Government of Puerto Rico?
Government retirees are creditors in the process of bankruptcy under Tittle III of Federal Law PROMESA. Any adjustment to pensions will be the result of a multiple step process that includes: certification of a Fiscal Plan by the Financial Oversight and Management Board (FOMB), presentation of a Plan of Adjustment by the FOMB and confirmation of a Plan of Adjustment by the Federal Court.
What is Title III under PROMESA?
As a result of the financial situation of the Government of Puerto Rico, on June 30, 2016, the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) was enacted. Title III refers to the section of PROMESA that covers court-supervised restructurings of United States territories and their covered instrumentalities or agencies, and permits them to continue operating while implementing fiscal reforms and debt restructuring. On May 3, 2017, the Government of Puerto Rico, by and through the Financial Oversight and Management Board for Puerto Rico (the “Board”), filed a petition with the United States District Court for the District of Puerto Rico, commencing a case under Title III of PROMESA.
What entities are in Title III?
Currently, the Government of Puerto Rico, the Puerto Rico Sales Tax Financing Corporation (COFINA, for its acronym in Spanish), the Employees Retirement System of the Government of Puerto Rico, the Puerto Rico Highways and Transportation Authority, and the Puerto Rico Electric Power Authority have all commenced Title III cases. The Title III cases of the Government and its instrumentalities and agencies are pending before the United States District Court for the District of Puerto Rico. The Honorable Laura Taylor Swain, United States District Judge, was designated as the presiding judge for the Title III cases.
Who represents the retired employees of the Government of Puerto Rico and its Title III instrumentalities in Title III cases?
The Official Committee of Retired Employees (COR, for its acronym in Spanish) of the Government of Puerto Rico represents the collective interests of government retirees that participate in the Employee Retirement System, the Teachers’ Retirement System, and the Judiciary Retirement System in Tittle III proceedings. The COR does not represent retired employees from the Puerto Rico Electric Power Authority and the University of Puerto Rico. The Committee was appointed in June 2017 by the United States Trustee. The members of the COR are:
The COR retained the services of: Bennazar, García & Milián, and Jenner & Block as its legal counsels; FTI Consulting as financial advisors; Segal Consulting as actuarial advisor; and Marchand ICS as its Information Agent.
How were the members of the Official Committee of Retired Employees from the Government of Puerto Rico selected?
PROMESA includes certain sections of the Bankruptcy Code that provide for the appointment of committees of creditors with similar collective interests to assure adequate representation of their interests. In Puerto Rico’s Title III case there are two committees: (1) the Unsecured Creditors Committee (UCC); and (2) the Committee of Retired Employees of the Government of Puerto Rico (COR). The members of the COR were selected by the U.S. Trustee. In forming the COR, the U.S. Trustee considered applications from individual retirees and conducted interviews. On June 15, 2017, the U.S. District Court filed a “Notice of Appointment” with the District Court, in which it identified the members appointed to the COR.
What will COR do in the Title III cases?
The COR represents and speaks on behalf of the P.R. Government retired employees in Title III cases, on a non-exclusive basis (that is, individual retirees may hire their own counsel, if they choose to do so). Among its responsibilities are:
What things is the COR not authorized to do?
The Official Committee of Retired Employees of the Government of Puerto Rico cannot:
When would the proposal by the Fiscal Oversight and Management Board (FOMB) to cut pensions and benefits to government retirees come into effect?
Pensions cannot be modified outside of a confirmed Plan of Adjustment by the Federal Court. In other words, although the FOMB’s fiscal plans propose pension cuts, pensions cannot be modified until the Federal Court issues an order confirming a final Plan of Adjustment. Once the Federal Court approves a Plan of Adjustment, retirees will vote to approve or reject said plan. Under the current scenario pension cuts are not expected to come into effect until 2022, at the earliest.
Which is the status of my pension and benefits?
The status of your pension remains unchanged until the Federal Court confirms a Plan of Adjustment for the Government of Puerto Rico that includes adjustments to pensions. Pension and benefits cannot be adjusted outside of a Plan of Adjustment confirmed by the Court.
What is a plan of adjustment?
A plan of adjustment, also known as POA, is a document presented by the debtor, which indicates how it will pay creditors, or the treatment that it will give to the different classes of claims. For the plan to be confirmed, it must be accepted by at least one group of impaired creditors. The plan of adjustment can only be presented by the Federal Oversight and Management Board. The Federal Court must confirm the plan of adjustment.
Are widows, minor and/or disabled children who receive pension from the retirement systems also represented by the COR?
Yes. The COR represents the widows of the pensioners who receive a pension from the retirement systems. It also represents minor and/or disabled children who receive a pension.
Does the COR represent PREPA retirees under Title III?
The Official Committee of Retired Employees of the Government of Puerto Rico was appointed by the United States Trustee in June 2017 to represent the interests of the approximately 167,000 retired employees from the Employee Retirement System of the Commonwealth of Puerto Rico, the Teachers’ Retirement System and the Judiciary Retirement System in matters related to Title III of federal PROMESA before the U.S. Federal Court.
Later, on July 3, 2017 a petition was filed under Title III of PROMESA for the Puerto Rico Electric Power Authority (PREPA). PREPA Retirees receive pensions and other post-employment retirement benefits (OPEB) through the PREPA Retirement System, known also as the Employees’ Retirement System of the Puerto Rico Electric Power Authority (SREAEE, for its acronym in Spanish). According to PREPA’s Fiscal Plan, which was certified on April 19, 2018, the SREAEE is “significantly underfunded” by no less than $3.6 billion, OPEB obligations of $384 million are completely unfunded, and PREPA’s debt structure is “not sustainable.”
In light of the recent developments related to PREPA Retirees, on May 14, 2018 the COR filed a motion that requested either the formation of a statutory committee to represent PREPA Retirees or the expansion of the COR’s authority to include representation of the PREPA retirees. This motion was filed to help ensure that the PREPA retirees receive adequate representation in the Title III proceedings.
On June 6, 2018, Judge Laura Taylor Swain denied without prejudice the COR’s motion, stating that despite the serious retiree-related issues within the PREPA Title III process there is no clear evidence that the PREPA retirees do not have adequate representation at this time that would require the appointment of a formal PREPA retiree committee. Judge Swain also noted that the Court and the U.S. Trustee will continue to monitor the issue.
In consideration of the above, the COR does not represent PREPA's retired employees.
Why the COR does not represent UPR retirees?
The COR is an official creditors’ committee appointed by the United States Trustee in the bankruptcy case of the Government of Puerto Rico under Tittle III. The COR represents retirees from the following retirement systems: Government Employees, Teachers and Judiciary. Since the University of Puerto Rico has not filed for bankruptcy, the COR does not have a judicial base to represent participants of its retirement system.
Does the COR represent individual retirees?
No. The COR represents the collective interests of all retirees in their pensions and health benefits in the Title III process.
Do I need to file a claim with the District Court to protect my pension and my benefits?
No. The District Court has not set a deadline to file a claim in any of the Title III cases. When a deadline is established, we will add that information to this website. At this time, we believe that the procedures regarding claims will direct the COR to file a single proof of claim on behalf of all retirees for pension, healthcare, and any other general retirement benefits.
What do I do if I have other claims against the Government and its instrumentalities?
It is important to note that the COR only represents your interest regarding your pension, healthcare, and any other general retirement benefits owed by a governmental entity in the Title III cases of the P.R. Government and certain of its instrumentalities. The COR cannot represent you concerning other debts that the P.R. Government, public corporations or instrumentalities might owe to you. You will need to file your own, separate claim for such other debts.
All creditors should receive by mail a notification when a claims deadline is set by the Court and a claim form (called a “Proof of Claim” form). For claims other than those related to your pension, healthcare, and other general retirement benefits, you will need to file a proof of claim with the District Court before expiration of the deadline (which has not been set at this time). Instructions for filing a claim will be provided on the Proof of Claim form.
What is the current status of my pension and benefits?
The status of our pension and benefits packages remains unchanged. At present, it is not anticipated that your pension or other benefits will change before a plan for the adjustment of debt (a “Plan of Adjustment”) is approved by the District Court. The Fiscal Plan that was certified in March 2017 contained proposals for modifications of accrued retirement benefits. That Fiscal Plan is being revised due to the effects of Hurricane Maria. However, it is the Plan of Adjustment that will likely determine the final status of pension and other benefits, and that Plan will be developed after the Fiscal Plan is revised.
What is the status of the Title III cases?
As stated above, a Fiscal Plan was certified by the Board in March 2017, prior to the commencement of the Title III cases. Fiscal Plans were also certified for the other entities after commencement of their Title III cases. In light of the economic effects of Hurricane Maria, the Fiscal Plans must be amended. The COR understands that the Board is in the process of working on revised Fiscal Plans, which may not be finalized for several months. While Hurricanes Irma and Maria have affected and interrupted the Title III cases, the Puerto Rico Government has indicated that it wishes to move forward with the Title III cases promptly. Therefore, with some short delay, it is expected that various pending litigation will resume soon.
Of the government entities that filed for bankruptcy under PROMESA’s Tittle III, has any of them emerged from bankruptcy?
Yes. In February 2019, the Federal Court issued and order confirming a Plan of Adjustment for COFINA, which is the first government entity to emerge for bankruptcy under PROMESA’s Tittle III.
COFINA’s Plan of Adjustment, which includes agreements with bondholders, restructured 24% of Puerto Rico’s consolidated debt and represents savings of $17 billion in debt service.
COFINA is an instrumentality of the Government of Puerto Rico created in 2016 to issue bonds guaranteed by the Sales and Use Tax (SUT)
Will I have the opportunity to express my opinion before a Plan of Adjustment is approved by the District Court?
Yes, you and other members of the community of the P.R. Government retired employees will have the opportunity to vote on the proposed Plan of Adjustment, and you may file a written objection and appear in Court. For this reason it is important that the community of the P.R. Government retired employees is up-to-date about the process and the proposals. If the P.R. Government retired employees do not agree with any adjustments that may be proposed for their pensions and benefits, then the District Court may consider arguments regarding the legality of such adjustments and the fairness and appropriateness of the proposed Plan of Adjustment.
How will I know when to vote on the plan to adjust the debt?
When the time to vote arrives, you will receive a notice by mail with the information regarding when and how to vote. In addition, the COR will keep you informed -through its information platforms- about its position regarding the plan and its impact in the community of retirees.
Is there a mediator in connection with the Title III cases?
Yes. On June 23, 2017, the District Court entered an order appointing a 5-person mediation team. According to the order, the purpose of the mediation team is to facilitate confidential settlement negotiations regarding any and all issues and proceedings arising in the Title III cases.
What is the COR's opinion regarding the bondholders motion seeking to be appointed as trustees of ERS?
On February 19, 2019 several Employee Retirement System (ERS) bondholders filed a motion seeking to be appointed as trustees of ERS to pursue claims against the Commonwealth of Puerto Rico. In said motion the bondholders also request that if they are not appointed as trustees of ERS, that the court appoints an independent third-party fiduciary as trustee to pursue claims in consultation with the bondholders.
The Official Committee of Retired Employees believes that the petition is not in the best interest of the retirees and will formally oppose it. We will keep you informed of the actions taken by the Committee regarding this petition.
Under the agreement achieved by the COR, retirees with monthly pension benefits of $1,500 or less will not experiment cuts. If you have monthly pension benefits of $1,501 or more, the maximum reduction is 8.5%. Adjustments to pensions will not come into effect until 2022, at the earliest. Visit the pension calculator to find out how the proposed adjustment could impact your pension.
Why is my pension exposed to potential cuts as part of the bankruptcy of the Government of Puerto Rico?
Government retirees are creditors in the process of bankruptcy under Tittle III of Federal Law PROMESA. Any adjustment to pensions will be the result of a multiple step process that includes: certification of a Fiscal Plan by the Financial Oversight and Management Board (FOMB), presentation of a Plan of Adjustment by the FOMB and confirmation of a Plan of Adjustment by the Federal Court.
- Fiscal Plan – a tool for the government of Puerto Rico to recover fiscal health and regain access to the financial markets. It is certified by the FOMB.
- Plan of Adjustment – a document that is presented by the FOMB, which indicates how creditors will be paid, or the treatment that will be given to the different classes of creditors. The Court must confirm the Plan of Adjustment, after it has been approved by at least one class of impaired creditors.
What is Title III under PROMESA?
As a result of the financial situation of the Government of Puerto Rico, on June 30, 2016, the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) was enacted. Title III refers to the section of PROMESA that covers court-supervised restructurings of United States territories and their covered instrumentalities or agencies, and permits them to continue operating while implementing fiscal reforms and debt restructuring. On May 3, 2017, the Government of Puerto Rico, by and through the Financial Oversight and Management Board for Puerto Rico (the “Board”), filed a petition with the United States District Court for the District of Puerto Rico, commencing a case under Title III of PROMESA.
What entities are in Title III?
Currently, the Government of Puerto Rico, the Puerto Rico Sales Tax Financing Corporation (COFINA, for its acronym in Spanish), the Employees Retirement System of the Government of Puerto Rico, the Puerto Rico Highways and Transportation Authority, and the Puerto Rico Electric Power Authority have all commenced Title III cases. The Title III cases of the Government and its instrumentalities and agencies are pending before the United States District Court for the District of Puerto Rico. The Honorable Laura Taylor Swain, United States District Judge, was designated as the presiding judge for the Title III cases.
Who represents the retired employees of the Government of Puerto Rico and its Title III instrumentalities in Title III cases?
The Official Committee of Retired Employees (COR, for its acronym in Spanish) of the Government of Puerto Rico represents the collective interests of government retirees that participate in the Employee Retirement System, the Teachers’ Retirement System, and the Judiciary Retirement System in Tittle III proceedings. The COR does not represent retired employees from the Puerto Rico Electric Power Authority and the University of Puerto Rico. The Committee was appointed in June 2017 by the United States Trustee. The members of the COR are:
- Retired Judge Miguel J. Fabre Ramírez
- Mrs. Carmen Haydee Nuñez
- Mr. Juan Ortíz Curet
- Rosario Pacheco Fontán
- Mrs. Milagros Acevedo Santiago
- Dr. Marcos A. López Reyes
- Mrs. Lydia R. Pellot
- Mrs. Blanca Paniagua
The COR retained the services of: Bennazar, García & Milián, and Jenner & Block as its legal counsels; FTI Consulting as financial advisors; Segal Consulting as actuarial advisor; and Marchand ICS as its Information Agent.
How were the members of the Official Committee of Retired Employees from the Government of Puerto Rico selected?
PROMESA includes certain sections of the Bankruptcy Code that provide for the appointment of committees of creditors with similar collective interests to assure adequate representation of their interests. In Puerto Rico’s Title III case there are two committees: (1) the Unsecured Creditors Committee (UCC); and (2) the Committee of Retired Employees of the Government of Puerto Rico (COR). The members of the COR were selected by the U.S. Trustee. In forming the COR, the U.S. Trustee considered applications from individual retirees and conducted interviews. On June 15, 2017, the U.S. District Court filed a “Notice of Appointment” with the District Court, in which it identified the members appointed to the COR.
What will COR do in the Title III cases?
The COR represents and speaks on behalf of the P.R. Government retired employees in Title III cases, on a non-exclusive basis (that is, individual retirees may hire their own counsel, if they choose to do so). Among its responsibilities are:
- Review the current and any future Fiscal Plan for the Government of Puerto Rico, and analyze all proposals that the government –through the Board– may make to modify pensions and other benefits that retirees are entitled to receive.
- Meet with the Board, the Fiscal Agency and Financial Advising Authority (AAFAF), and other parties-in-interest, as well as with mediators appointed by Judge Laura Taylor Swain as appropriate to address and negotiate any proposed changes to pensions or other retiree benefits and to provide legal, financial, actuarial and economic analysis to support the protection of retiree benefits.
- Speak on behalf of the collective interests of the Government of Puerto Rico retired employees at all court hearings and other public proceedings.
- Keep the community of the Government of Puerto Rico retired employees informed regarding the ongoing legal process with updated, trustworthy and timely information.
What things is the COR not authorized to do?
The Official Committee of Retired Employees of the Government of Puerto Rico cannot:
- Represent individual interests of a particular retiree or pension system
- Advise or give opinions regarding matters related to an individual’s pension benefits
- Release information about the mediation process.
When would the proposal by the Fiscal Oversight and Management Board (FOMB) to cut pensions and benefits to government retirees come into effect?
Pensions cannot be modified outside of a confirmed Plan of Adjustment by the Federal Court. In other words, although the FOMB’s fiscal plans propose pension cuts, pensions cannot be modified until the Federal Court issues an order confirming a final Plan of Adjustment. Once the Federal Court approves a Plan of Adjustment, retirees will vote to approve or reject said plan. Under the current scenario pension cuts are not expected to come into effect until 2022, at the earliest.
Which is the status of my pension and benefits?
The status of your pension remains unchanged until the Federal Court confirms a Plan of Adjustment for the Government of Puerto Rico that includes adjustments to pensions. Pension and benefits cannot be adjusted outside of a Plan of Adjustment confirmed by the Court.
What is a plan of adjustment?
A plan of adjustment, also known as POA, is a document presented by the debtor, which indicates how it will pay creditors, or the treatment that it will give to the different classes of claims. For the plan to be confirmed, it must be accepted by at least one group of impaired creditors. The plan of adjustment can only be presented by the Federal Oversight and Management Board. The Federal Court must confirm the plan of adjustment.
Are widows, minor and/or disabled children who receive pension from the retirement systems also represented by the COR?
Yes. The COR represents the widows of the pensioners who receive a pension from the retirement systems. It also represents minor and/or disabled children who receive a pension.
Does the COR represent PREPA retirees under Title III?
The Official Committee of Retired Employees of the Government of Puerto Rico was appointed by the United States Trustee in June 2017 to represent the interests of the approximately 167,000 retired employees from the Employee Retirement System of the Commonwealth of Puerto Rico, the Teachers’ Retirement System and the Judiciary Retirement System in matters related to Title III of federal PROMESA before the U.S. Federal Court.
Later, on July 3, 2017 a petition was filed under Title III of PROMESA for the Puerto Rico Electric Power Authority (PREPA). PREPA Retirees receive pensions and other post-employment retirement benefits (OPEB) through the PREPA Retirement System, known also as the Employees’ Retirement System of the Puerto Rico Electric Power Authority (SREAEE, for its acronym in Spanish). According to PREPA’s Fiscal Plan, which was certified on April 19, 2018, the SREAEE is “significantly underfunded” by no less than $3.6 billion, OPEB obligations of $384 million are completely unfunded, and PREPA’s debt structure is “not sustainable.”
In light of the recent developments related to PREPA Retirees, on May 14, 2018 the COR filed a motion that requested either the formation of a statutory committee to represent PREPA Retirees or the expansion of the COR’s authority to include representation of the PREPA retirees. This motion was filed to help ensure that the PREPA retirees receive adequate representation in the Title III proceedings.
On June 6, 2018, Judge Laura Taylor Swain denied without prejudice the COR’s motion, stating that despite the serious retiree-related issues within the PREPA Title III process there is no clear evidence that the PREPA retirees do not have adequate representation at this time that would require the appointment of a formal PREPA retiree committee. Judge Swain also noted that the Court and the U.S. Trustee will continue to monitor the issue.
In consideration of the above, the COR does not represent PREPA's retired employees.
Why the COR does not represent UPR retirees?
The COR is an official creditors’ committee appointed by the United States Trustee in the bankruptcy case of the Government of Puerto Rico under Tittle III. The COR represents retirees from the following retirement systems: Government Employees, Teachers and Judiciary. Since the University of Puerto Rico has not filed for bankruptcy, the COR does not have a judicial base to represent participants of its retirement system.
Does the COR represent individual retirees?
No. The COR represents the collective interests of all retirees in their pensions and health benefits in the Title III process.
Do I need to file a claim with the District Court to protect my pension and my benefits?
No. The District Court has not set a deadline to file a claim in any of the Title III cases. When a deadline is established, we will add that information to this website. At this time, we believe that the procedures regarding claims will direct the COR to file a single proof of claim on behalf of all retirees for pension, healthcare, and any other general retirement benefits.
What do I do if I have other claims against the Government and its instrumentalities?
It is important to note that the COR only represents your interest regarding your pension, healthcare, and any other general retirement benefits owed by a governmental entity in the Title III cases of the P.R. Government and certain of its instrumentalities. The COR cannot represent you concerning other debts that the P.R. Government, public corporations or instrumentalities might owe to you. You will need to file your own, separate claim for such other debts.
All creditors should receive by mail a notification when a claims deadline is set by the Court and a claim form (called a “Proof of Claim” form). For claims other than those related to your pension, healthcare, and other general retirement benefits, you will need to file a proof of claim with the District Court before expiration of the deadline (which has not been set at this time). Instructions for filing a claim will be provided on the Proof of Claim form.
What is the current status of my pension and benefits?
The status of our pension and benefits packages remains unchanged. At present, it is not anticipated that your pension or other benefits will change before a plan for the adjustment of debt (a “Plan of Adjustment”) is approved by the District Court. The Fiscal Plan that was certified in March 2017 contained proposals for modifications of accrued retirement benefits. That Fiscal Plan is being revised due to the effects of Hurricane Maria. However, it is the Plan of Adjustment that will likely determine the final status of pension and other benefits, and that Plan will be developed after the Fiscal Plan is revised.
What is the status of the Title III cases?
As stated above, a Fiscal Plan was certified by the Board in March 2017, prior to the commencement of the Title III cases. Fiscal Plans were also certified for the other entities after commencement of their Title III cases. In light of the economic effects of Hurricane Maria, the Fiscal Plans must be amended. The COR understands that the Board is in the process of working on revised Fiscal Plans, which may not be finalized for several months. While Hurricanes Irma and Maria have affected and interrupted the Title III cases, the Puerto Rico Government has indicated that it wishes to move forward with the Title III cases promptly. Therefore, with some short delay, it is expected that various pending litigation will resume soon.
Of the government entities that filed for bankruptcy under PROMESA’s Tittle III, has any of them emerged from bankruptcy?
Yes. In February 2019, the Federal Court issued and order confirming a Plan of Adjustment for COFINA, which is the first government entity to emerge for bankruptcy under PROMESA’s Tittle III.
COFINA’s Plan of Adjustment, which includes agreements with bondholders, restructured 24% of Puerto Rico’s consolidated debt and represents savings of $17 billion in debt service.
COFINA is an instrumentality of the Government of Puerto Rico created in 2016 to issue bonds guaranteed by the Sales and Use Tax (SUT)
Will I have the opportunity to express my opinion before a Plan of Adjustment is approved by the District Court?
Yes, you and other members of the community of the P.R. Government retired employees will have the opportunity to vote on the proposed Plan of Adjustment, and you may file a written objection and appear in Court. For this reason it is important that the community of the P.R. Government retired employees is up-to-date about the process and the proposals. If the P.R. Government retired employees do not agree with any adjustments that may be proposed for their pensions and benefits, then the District Court may consider arguments regarding the legality of such adjustments and the fairness and appropriateness of the proposed Plan of Adjustment.
How will I know when to vote on the plan to adjust the debt?
When the time to vote arrives, you will receive a notice by mail with the information regarding when and how to vote. In addition, the COR will keep you informed -through its information platforms- about its position regarding the plan and its impact in the community of retirees.
Is there a mediator in connection with the Title III cases?
Yes. On June 23, 2017, the District Court entered an order appointing a 5-person mediation team. According to the order, the purpose of the mediation team is to facilitate confidential settlement negotiations regarding any and all issues and proceedings arising in the Title III cases.
What is the COR's opinion regarding the bondholders motion seeking to be appointed as trustees of ERS?
On February 19, 2019 several Employee Retirement System (ERS) bondholders filed a motion seeking to be appointed as trustees of ERS to pursue claims against the Commonwealth of Puerto Rico. In said motion the bondholders also request that if they are not appointed as trustees of ERS, that the court appoints an independent third-party fiduciary as trustee to pursue claims in consultation with the bondholders.
The Official Committee of Retired Employees believes that the petition is not in the best interest of the retirees and will formally oppose it. We will keep you informed of the actions taken by the Committee regarding this petition.