| | 28 | | Alejandro García Padilla | | Governor | | Puerto Rico |
| If Puerto Rico didn’t exist, pension basket case Illinois might have invented it just to feel better about itself. In April, Governor Alejandro García Padilla signed into law a bill that will overhaul the U.S. territory’s employee pension system. For the past 60 years, “no administration has taken the responsibility of reforming the retirement system,” he said. That García Padilla, 42, spearheaded this change surprised some observers given that he ran in opposition to the austerity imposed by the previous governor. After he and his Popular Democratic Party took office in 2012, though, they discovered that Puerto Rico was in worse fiscal shape than previously thought. García Padilla was forced to implement his own budget remedies, including reforms to the $4.4 billion Employees Retirement System, which was just 4.5 percent funded and had outstanding loans totaling $3 billion at the end of the 2012 fiscal year. Resisted by labor, the changes — upheld by Puerto Rico’s Supreme Court in June — freeze the existing defined benefit fund and move all workers to a new, hybrid plan. García Padilla has yet to tackle Puerto Rico’s $2 billion Teachers Retirement System, which had a funded ratio of 17 percent for fiscal 2012. The employees’ fund is now expected to keep total assets above $1 billion. As rating agency Moody’s Investors Service noted in a May 2013 report, that number is a fraction of its $30 billion in unfunded liabilities, but it shows progress. |
