The Financial Oversight and Management Board for Puerto Rico on Thursday recertified a fiscal plan for the commonwealth after reaching an understanding with Gov. Ricardo Rossello.
Pension reforms sought by the oversight board remain in the fiscal plan, despite the governor's objections. The plan calls for freezing pension benefit accruals by July 1, 2019, and enrolling all employees in defined contribution plans, as well as Social Security. Benefits would be reduced progressively to an average cut of 10%, with no cuts for participants whose combined pension and Social Security benefits are below the poverty level of $1,000 per month. The pension reforms are expected to be included in a plan of adjustment to be confirmed by the court overseeing Puerto Rico's bankruptcy proceedings.
Mr. Rossello did agree to labor reforms in the fiscal plan, including making Puerto Rico an "at-will employment" jurisdiction for current and new employees. Those changes will require action by the Puerto Rico Legislature.
Other changes in the recertified plan include new investment priorities aimed at promoting economic development, such as a public-private partnership initiative and a critical infrastructure office.
Oversight board chairman Jose B. Carrion III said in a statement that the fiscal and structural reforms "will help return growth to our island's economy."