Northern Mariana Islands Settlement Fund: Payments and Court Oversight

The Northern Mariana Islands Settlement Fund is a court-supervised trust created by a 2013 class-action settlement to pay pension benefits to former CNMI government employees after the territory’s original retirement system ran out of money. It guarantees retirees at least 75 percent of the benefits they were originally promised, with the CNMI government legally required to make annual payments to keep it solvent. The fund held roughly $145 million in assets at the end of fiscal year 2024, but its own trustee has warned that current assets may cover only about five more years of benefit payments if the government keeps falling short on what it owes.¹

How the Fund Was Created

The CNMI’s original defined-benefit pension system, the NMI Retirement Fund, was set up under CNMI Public Law 6-17 as an autonomous public corporation. The CNMI government stopped making legally required contributions in 2005, and the fund’s assets steadily drained away.² Retirees who had paid in throughout their careers faced the possibility of receiving nothing.

In 2009, they filed a class action in the U.S. District Court for the Northern Mariana Islands, Betty Johnson v. Eloy S. Inos, et al. (Case No. 09-00023), naming the CNMI governor and other officials as defendants.³ The parties reached a settlement on August 6, 2013, and the court approved it on September 30, 2013.⁴ All remaining assets of the old Retirement Fund were transferred to a newly created Settlement Fund. The court entered a consent judgment of approximately $779 million against the CNMI government, enforceable if the government fails to meet its payment obligations.⁵

The settlement class covers everyone who, as of August 6, 2013, was a member of the Retirement Fund’s defined-benefit plan or entitled to survivor’s benefits, provided they did not opt out.⁶ The fund itself is structured as an extension of the U.S. District Court, not as a CNMI government agency, and its assets are legally separate from the government. It is administered by a court-appointed trustee with the powers of a federal equity receiver, currently Joyce C.H. Tang, under the supervision of Designated Judge Frances Tydingco-Gatewood.⁷

What Retirees Receive

Under the settlement, the Settlement Fund pays retirees 75 percent of their full original benefit. The remaining 25 percent was not written off. It is supposed to be paid separately by the CNMI government’s general fund, funded through legislation such as Public Law 18-56, which directs a portion of annual license fee revenues toward the 25 percent obligation.⁴ Casino gross revenue taxes have been tapped through separate legislation to supplement those 25 percent payments and, at times, to fund retiree bonuses.

That second stream is now in jeopardy. The CNMI government indicated in late 2025 that it lacked funding to continue the 25 percent payments beyond December 2025, and the fund warned retirees to prepare for those payments to stop as of January 1, 2026. Separately, the Aetna International health insurance coverage for retirees was set to expire at the end of 2025, with renewal dependent on a $7.2 million appropriation in the revised fiscal year 2026 budget.¹

What the CNMI Government Owes Each Year

The settlement requires the CNMI government to make a minimum annual payment to the fund, historically paid in biweekly or weekly installments. On top of that minimum, the government may owe an “Alternative Payment of a Greater Amount,” calculated as 17 percent of the government’s total annual revenue minus whatever minimum annual payment was already made.⁸

CNMI Public Law 20-33 established a dedicated “Settlement Fund Revolving Fund Account” fed by gross revenue taxes, earmarked for the minimum annual payment from fiscal years 2018 through 2024.²

The obligation for fiscal year 2026 stands at $29 million. As of November 2025, only $3 million had been paid.¹ The government owed roughly $31 million for fiscal year 2025, and the projected obligation declines over time to about $12 million by 2037.⁹

The Marianas Public Land Trust Loan

To cover the fiscal year 2026 shortfall, the CNMI legislature and Governor David M. Apatang authorized a $29 million loan from the Marianas Public Land Trust. Public Law 24-13, signed September 23, 2025, authorizes the loan at a simple interest rate not exceeding 7.5 percent per year, with repayment secured by the interest generated on MPLT trust proceeds under the NMI Constitution.¹⁰ Public Law 24-17, signed November 11, 2025, conditionally authorized MPLT to open a margin account to facilitate the transaction.¹ The legislation cited the exhaustion of federal financial assistance and the CNMI’s slow post-pandemic tourism recovery as the reasons the loan was necessary.

The Fund’s Financial Position

Audited financial statements for the year ending September 30, 2024, show total assets of $145,327,088 and total net assets of $144,914,166. Ernst & Young issued an unmodified audit opinion.⁹

The investment portfolio totaled about $138 million at fair value on that date, split among fixed-income mutual funds ($74 million), balanced funds ($35 million), equity funds ($26 million), and smaller allocations to money market funds and cash.⁹ Assets beyond what is needed for current operations are managed by professional investment advisors registered with the U.S. Securities and Exchange Commission.⁴

Fiscal year 2024 revenues reached $67.8 million, driven by $47.4 million in CNMI government contributions and $18.6 million in net investment income. Total expenses were $52.3 million, with $50.5 million going to benefit and refund payments. Net assets grew by $15.5 million on the year, up from an $8.3 million gain in fiscal year 2023.⁹

Those figures look healthy on their own. The trustee has cautioned they are not. The fund’s November 2025 newsletter warned that current assets were projected to cover only about five years of benefit payments, and that continued government shortfalls could force the fund to sell investments to keep checks flowing to retirees.¹

Court Oversight and the December 2025 Hearing

The federal court has kept active supervision over the CNMI government’s compliance with the settlement. In September 2025, Judge Tydingco-Gatewood ordered Governor Apatang and Secretary of Finance Tracy Norita to appear personally at a status hearing on December 10, 2025, to explain the payment status, future commitments, and any obstacles to meeting the government’s obligations. If the governor could not attend, Lieutenant Governor Dennis Mendiola was required to appear in his place.¹¹ The trustee files regular reports with the court, and the $779 million consent judgment remains available as an enforcement mechanism if the government misses its obligations.

Cost-of-Living Adjustments Are Not Protected

A separate but closely related fight has settled the status of cost-of-living adjustments. In Camacho v. Northern Mariana Islands Settlement Fund, retiree Rosa A. Camacho argued that COLAs were accrued benefits protected by Article III, Section 20(a) of the NMI Constitution.

On November 3, 2025, the NMI Supreme Court ruled against her, holding that COLAs were not part of the core pension promise vested at the time of employment and could therefore be revised or reduced by the legislature without violating constitutional protections. The per curiam opinion was issued by Justices Pro Tempore Robert J. Torres Jr., F. Philip Carbullido, and Sabrina S. McKenna.¹² The U.S. Court of Appeals for the Ninth Circuit separately affirmed the lower court’s ruling against Camacho in November 2025.¹³ As of late 2025, Camacho had filed a petition for rehearing before the NMI Supreme Court and was seeking a stay of the Ninth Circuit’s opinion pending that rehearing.¹

The distinction matters for retirees reading the fund’s numbers. The 75 percent floor on original benefits is the settlement’s core promise, backed by the consent judgment and federal court supervision. COLAs, the separate 25 percent payments, and health insurance renewal sit outside that core promise and depend on year-to-year action by the CNMI legislature and governor, which is where the pressure now is.

1
NMI Settlement Fund. NMISF Newsletter Issue 6
2
Marianas Variety. Trustee: NMI Government Continues to Timely Pay Settlement Fund
3
NMI Settlement Fund. NMI Settlement Fund
4
NMI Settlement Fund. NMISF Financial Statements FY 2024
5
U.S. District Court for the NMI. Notice of Class Action Settlement
6
U.S. District Court for the NMI. Notice of Class Action Settlement
7
NMI Settlement Fund. Order Appointing Settlement Trustee
8
Pacific Island Times (Post Guam). Settlement Fund Trustee: CNMI Diligent in Making Payments
9
NMI Settlement Fund. NMISF Financial Statements Final FY 2024
10
CNMI Law. Public Law 24-13
11
Marianas Variety. Judge Wants Governor, Finance Chief to Report on Settlement Fund Payments
12
NMI Judiciary. Court Rules Cost of Living Adjustments Are Not Protected Retirement Benefits
13
Law360. Rosa A. Camacho et al v. NMI Settlement Fund et al