This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Puerto Rico Addresses Collapsing Pension System


SAN JUAN, Puerto Rico (AP) â¿¿ Puerto Rican officials on Wednesday proposed what they called "severe" cost-saving measures designed to help rescue one of the U.S. territory's public pension systems that is on the brink of collapse.

Treasury Secretary Melba Acosta called for increased employee contributions, a higher retirement age and reduced benefits and monthly pensions for certain workers.

"The problem is very severe and the problem is very large," she said. "We have to take quick and forceful action."

The proposal was endorsed by Javier Ferrer, president of the Government Development Bank of Puerto Rico, who said it urgently needs to be approved by the legislature.

"The reality is that the government does not have the resources to keep contributing additional funds to the system," he said.

The plan would raise employee contributions from about 8 percent to 10 percent, and increase the retirement age from 58 to 65 for some workers and from 65 to 67 for others. It also would transfer certain employees from a defined-benefit plan to a hybrid plan that included a defined contribution component.

Acosta and Ferrer also want to reduce bonuses and medical plan contributions, but say minimum monthly pensions should rise from $400 to $500.

The proposal is to be submitted to legislators this week. Gov. Alejandro Garcia is expected to sign it if lawmakers approve the plan.

Acosta said that even if the plan is approved as it currently stands, the Caribbean island's nearly depleted general fund would still have to contribute $100 million a year for several decades to ensure the pension system keeps operating.

The announcement comes amid stern warnings from economists and credit rating agencies that the pension system is buckling under a more than $37 billion unfunded liability. Experts previously recommended that the government reduce benefits, raise the retirement age and increase contributions from current employees.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $92.69 -0.59%
FB $119.49 1.40%
GOOG $711.11 1.40%
TSLA $214.84 1.60%
YHOO $37.23 0.79%


Chart of I:DJI
DOW 17,740.63 +79.92 0.45%
S&P 500 2,057.14 +6.51 0.32%
NASDAQ 4,736.1550 +19.0610 0.40%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs