A joint resolution expressing a lack of confidence in the Administrator of the Social Security Administration and the Chairwoman of the SSA Board of Trustees passed the House of Delegates and submitted to Senate.  The resolution was assigned to the Senate Committee on Health & Social Welfare.

The resolution is a response to the Social Security Administration’s Board of Trustee’s decision to suspend supplemental benefits payments authorized by Olbiil Era Kelulau.

Social Security Board of Trustees had earlier informed the Olbiil Era Kelulau that an actuarial study of the SSA Fund revealed that continued funding of the supplemental benefits would jeopardize the SSA Retirement Fund.

SSA was already withdrawing from the Retirement Fund to supplement current earned SSA benefits payments. Adding the supplemental benefits will push SSA to withdraw more from the Retirement Fund, jeopardizing the fund.

“What we are doing here is protecting the Palauan people.  Social Security is an entitlement.  Law requires people to put money into it, and when they retire, they will get their money back,” explained Delegate Lee Otobed, one of the introducers of the resolution.

Delegate Otobed’s explanation during the 9th Special Session incorrectly states that the supplemental benefits are earned benefits.   The supplemental benefit payments that OEK has mandated SSA to pay were not earned by the SS contributors but were made arbitrarily by OEK to supplement what SS beneficiaries were already receiving benefits from their contributions.  In fact, OEK decided on the supplemental benefit amount without SSA actuarial study as mandated by law and funded the supplemental benefits from local revenue. In 2021 and 2022, the national government had SSA pay for the supplemental benefits due to low government revenue collections.

ROP SSA Actuarial Study of 2020 demonstrates that the Fund that belongs to thousands of contributors, including those still working, could collapse if current practices continue.  The study’s recommended solution to ensuring SSA Retirement Fund health while assuming payment of the supplemental benefits included raising the retirement age to 65 and raising contributions of people working now from 7 to 9%.

OEK has not acted on the actuarial advice, fearing public response to increased taxes on already deflated income. 

The SSA Board’s decision led OEK and four SSA beneficiaries to file a lawsuit against SSA.  Court has ordered that SSA continues payments of the supplemental benefits until the final outcome of the court case.

Commenting on the lawsuit, President Whipps said he understood both sides of the argument and thinks it’s best once and for all that the Court clarifies the vague language of the law.

Meanwhile, Civil Service Pension Plan is holding workshops this week to find ways to prevent it from either collapsing entirely or reducing benefit payments to beneficiaries.  The Pension Plan pays out $10.7 million a year in benefits and collects $7.05 million in contributions.  Each year, it is $2.7 million short. The government has been appropriating funds from different sources to keep Pensions alive, which could be used to fund other critical services such as health and education.

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