SAN JUAN, Puerto Rico >> Dozens of municipalities and public corporations in Puerto Rico have failed to pay or deposit a total of $340 million into a retirement system for government employees, a federal control board overseeing the island’s finances warned today.
The board said 66 municipalities including the capital of San Juan and 28 public corporations including the island’s water and sewer authority have accrued the overall debt since 2017, when the government created a pay-as-you-go pension plan.
“It is unacceptable to withhold retirement contributions from an employee and not immediately transfer that money into the individual retirement account where it belongs,” said Natalie Jaresko, the board’s executive director. “This is the type of mismanagement that led to disastrous underfunding of pension systems.”
Puerto Rico faces nearly $50 billion in unfunded pension liabilities as it continues to restructure a portion of its more than $70 billion public debt load amid a 12-year recession.
Jaresko said the San Juan municipality is among those that have accumulated the largest debts. A spokesman for Mayor Carmen Yulin Cruz did not immediately return a message for comment.
A spokeswoman for one of Puerto Rico’s largest worker unions did not immediately return a call for comment.
Also today, the control board sued nearly two dozen companies, including Bristol Myers Squibb and Evertec Inc., seeking to recover millions of dollars paid to them by Puerto Rico’s government for a variety of services in recent years amid the economic crisis. The suits allege the money transfers were unlawful under a bankruptcy code and Puerto Rico law.
The board said that as early as 2012, the government’s liabilities exceeded the value of its assets during the time of the transfers. It also said government officials don’t have copies of contracts related to certain transfers.