Puerto Rico Pension Reform Advances

The Puerto Rico House of Representatives and Senate have approved separate bills to reform the commonwealth’s main government pension plan.

The bills address the Employees Retirement System, which has only 6 cents for every dollar actuarially required.

In late February Puerto Rico Gov. Alejandro García Padilla proposed a set of reforms.

Monday night’s actions were on bills that largely mirrored García Padilla’s proposed reforms, an administration official said.

The bill passed by the House has an amendment that some are calling constitutionally questionable.

On Tuesday members from the House and Senate met and agreed to vote on an identical bill without the amendment. That vote is expected to take place Thursday.

The bill is expected to pass. The governor is expected to sign the passed bill on Thursday or Friday.

Passage of the bill should bring long-term financial stability to the Employees Retirement System, said the García Padilla official.

Puerto Rico's general obligation debt is rated BBB-minus by Fitch Ratings and Standard & Poor's and the equivalent Baa3 by Moody's Investor's Service. They have all pointed to the underfunded pension system as partial explanations for their weak ratings of the commonwealth's GO debt.

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