Court Rules Cost-of-Living-Adjustments Are Not Protected Retirement Benefits

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Saipan, CNMI – The Supreme Court of the Commonwealth of the Northern Mariana Islands today issued its opinion in Camacho v. Northern Mariana Islands Settlement Fund, Supreme Court No. 2024-SCC-0024-CQU, answering a certified question from the United States Court of Appeals for the Ninth Circuit.

The Court held that section 8334(e) of the Northern Mariana Islands Retirement Fund Act of 1988 did not grant Class II members of the Retirement Fund a constitutionally protected accrued costof- living adjustment (“COLA”) benefit under Article III, section 20(a) of the NMI Constitution.

The Court emphasized that while membership in the Retirement Fund is a contractual relationship, only the core pension promise existing when employment began is constitutionally protected. Because COLAs were introduced after appellant Rosa A. Camacho joined the Fund, they were not part of her vested benefits. The Court noted that the Commonwealth’s repeated amendments and suspensions of COLAs reflected policy adjustments rather than constitutional entitlements.

In reaching its decision, the Court applied the three-part test for contractual impairment adopted in Tano Group v. Department of Public Works, 2009 MP 18, and found no substantial impairment under Article III, section 20(a). The opinion also drew support from other jurisdictions, including Colorado, Alaska, and Hawai‘i, which have held that legislatures may revise or reduce COLAs without violating constitutional protections for public employee pensions.

The Court’s opinion was issued per curiam by Justices Pro Tempore Robert J. Torres, Jr., F. Philip Carbullido, and Sabrina S. McKenna

The full opinion can be read on the Law Revision Commission website: https://cnmilaw.org/pdf/supreme/2025-MP-10.pdf

2025-PR-022

FOR IMMEDIATE RELEASE

November 3, 2025

This press release has been prepared by court staff for the convenience of the public. For further information, contact the Supreme Court at Supreme.Court@NMIJudiciary.gov