Unions Sue Puerto Rico, Bank Over Mismanagement of Retirement Funds

Two Puerto Rico-based unions representing teachers and state workers on the island have filed suit against the Puerto Rican government and local bank over the mismanagement of their retirement accounts. The American Federation of Teachers (AFT) and the American Federation of State, County and Municipal Employees in Puerto Rico claim that their trust has been betrayed.

Here is an excerpt from report in Caribbean Business:

“By the commonwealth’s own admission, it—along with the Retirement Board of the Government of Puerto Rico, the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF), and their responsible officials—has failed to create and administer Law 106’s promised defined-contribution accounts, and instead has taken hundreds of millions of dollars of employee pension contributions and stashed more than $300 million in government accounts at Banco Popular that earn virtually zero interest,” the release reads.

Puerto Rico’s government, the AFT said, “has been aided and abetted in this violation of statutory and fiduciary duties” by the Financial Oversight and Management Board and Banco Popular. “As a result, thousands of public servants have been deprived of untold millions of dollars in interest and investment income that they should have been earning over the past year.”

Defendants include the commonwealth; its governor; its chief financial officer and secretary of the treasury; the retirement system and its voting members; AAFAF and its executive director; the oversight board; and Banco Popular.