A federal judge said he was "inclined to dismiss" a bankruptcy filing by the Northern Mariana Islands pension fund, scuttling the first such case by a cash-strapped U.S. public-employee retirement system, the Wall Street Journal reported today. Bankruptcy Judge Robert Faris wrote in a tentative ruling on Tuesday that the pension fund is a "governmental unit" and therefore ineligible for chapter 11 protection. The islands' pension fund filed for protection last month after it failed repeatedly to force the government of the U.S. territory to contribute to its retirees' benefit plan. The pension-fund officials had been seeking in court to cut retirement benefits by about half to save money. The case's dismissal complicates efforts to preserve retirement benefits that are owed to about 10 percent of the islands' 53,000 residents. The fund now has $256 million to cover $1 billion in liabilities over the next 20 or so years. Officials say that the fund could run out of money to pay benefits by 2014.
