The Northern Mariana Islands is a U.S. territory. And just like U.S. states, it has a pension plan for government employees. But after years of bestowing lavish benefits on public workers (and their descendants), it has now declared bankruptcy. However, the fund is protected in the commonwealth's constitution. And commonwealths and states cannot declare bankruptcy under American law. Therefore, the pension fund is arguing that it works for the commonwealth but is separate from it. The case is important because if the pension fund is found to be separate from the state and allowed to declare bankruptcy, some U.S. states, whose pension fund are also in bad shape, may be tempted to do the same.
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