The civil case filed by Olbiil Era Kelulau and four Social Security beneficiaries against Palau Social Security Administration is currently pending trial at the Palau Supreme Court.

The case seeks to answer the question, does Olbiil era Kelulau (OEK) have the authority to obligate Palau Social Security Administration to use Social Security Funds to pay supplemental benefits created by law rather than earned by the Social Security beneficiaries?

Perhaps a simpler question to clarify the issue is this, does OEK have the authority to tell a bank holding your money in a savings account to take your savings and pay other obligations it created?  Or can it authorize the bank to take the interest earned from your savings and use it to pay other obligations? I think we know the answer to this.

Money in the Palau Social Security Retirement Fund is monies earned by individual workers, deducted from their salaries, and placed into savings (trust fund) to earn interest for when those individuals retire.  Now, OEK will tell the Social Security Board of Trustees, who were entrusted to invest and take care of your money, to take that money and pay other people.  Now Social Security Board says ok, they will take your savings and pay someone else because the government told them to do so.

Is this legal or the right thing to do?  According to the Social Security Act PNCA Title 41, this is illegal.  In fact, Section 704 of the law says that “Any bill to amend this chapter which has financial implications for the Retirement Fund must be accompanied by a report from the Actuary.  (Note:  Supplemental Benefit did not have an actuary study)

Furthermore, the law says SS money must be separated from all other funds, including Republic’s general fund, and SHALL be administered by the Social Security Administration “exclusively for the purpose of this chapter.”  EXCLUSIVELY, meaning, NO OTHER REASON OTHER THAN RETIREMENT FUND.

The only authority under the Social Security Act that OEK has is to remit their employees’ money to SSA for those employees’ retirement.

So the question to be answered is, Does OEK have the authority and power to make SSA Board use the funds from the Retirement Fund to pay supplemental benefits?

PNCA Title 41 Section 774 Mismanagement of Fund:  Any person who has a fiduciary relationship with the Fund and who is found guilty of mismanagement of the Fund, whether by malfeasance, shall be guilty of a felony and is liable to imprisonment for a period not to exceed 15 years or a fine of not man than one hundred thousand dollars (By: L.N. Reklai – Opinion)

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