(Newser)
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It's a high-profile milestone out of a not-so-high-profile place. The Northern Mariana Islands' public pension fund sought bankruptcy protection last month, a notable move in that it's the first such US fund to do so. The Wall Street Journal paints a picture of a complicated road to collapse for the Pacific Ocean territory, complete with a prominent Merrill Lynch fund adviser who went missing while fishing last year, a perhaps overly generous approach (when pensioners die, their kids can collect part of the payments), and a lawsuit against Merrill Lynch itself.
Here's how dire the territory's financial situation is: It's considering allowing Japan to unload tsunami debris on one of its unoccupied islands. And about 10% of the 53,000 residents collect a pension or are owed one when they retire—and the Journal notes that the money is a big deal to many, who don't receive Social Security payments. Retirees sued Merrill in 2009, upset over what it saw as bad advice: The median public pension fund had 61% of assets invested in stocks before the financial crisis; the islands' fund had closer to 75%. The fund's board instead faults the government's contributions ("Cadillac pension benefits with Pinto payments," proclaimed the chair) but the board has also been accused of having an "undeserved reverence" for Merrill. Island officials predict that the fund will be cash-less by 2014.
