Puerto Rico’s Supreme Court halts teacher pension system reform

The Supreme Court of Puerto Rico put the brakes on controversial legislation to reform the pension system for teachers, a ruling that was immediately denounced by the island’s governor.

The court, in a ruling reported by Reuters and BNamericas.com, created a special commission to investigate the matter and submit a report by Feb. 7. The case was brought by the Teachers Association, which argued the pension changes were unconstitutional.

The reforms, which led to a strike this week and street protests outside the capitol, increased employee contributions to the retirement system to 10 percent of salary from 9 percent.

The reforms also guaranteed current teachers a monthly pension of at least $1,625, about $250 more than the current minimum. With 30 years of tenure, current teachers could retire at age 55, up from 50 under the old law. The retirement age for new employees was raised to 62.

Like other public pension plans, Puerto Rico’s was facing huge unfunded liabilities. They have been pegged at $10 billion. That, and other pension problems facing the government, caused rating agencies to warn that the island’s credit rating was at risk.

“The resolution emitted by the Supreme Court is particularly dangerous in this historic moment in which we live because our will to save the teachers pension system is being evaluated in relation to the country's credit rating,” Gov. Alejandro Garcia Padilla said in a statement.

Pension reform of the retirement system for judicial employees is also the subject of a lawsuit is under review by the high court.

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