Current laws are giving the Palau Social Security Administration (SSA) conflicting mandates, according to SSA Chairwoman Johanna Ngiruchelbad.
Responding to Senator Rukebai Inabo’s letter (which demanded the legal authorization on which SSA based their decision to withhold payment of the $100 supplemental benefits from retirees), Chairwoman Ngiruchelbad said that they are in a “legal predicament” caused by laws that seem to demand conflicting responses from them.
The Supplemental Benefit(s) is an additional benefit of $100 appropriated by the government to supplement the Social Security benefits. It is not part of the benefit formula built into the Social Security System.
Although the issue was resolved after a joint meeting of SSA and the national leadership, resulting in SSA acceding to paying the supplemental benefits, the issue of conflicting mandates remained.
The SSA law requires that the Trustees act as fiduciaries and fulfill the mandate of the law, which states that the Social Security System “…be self-supporting and self-financing and not to be financed by public money (except to the extent that the government, in its capacity as an employer, makes contributions to the system)”. However, RPPL 11-12, the FY 2022 Unified Budget Act, appropriated $1.9 out of the $3.9 million needed to pay the supplemental benefit and mandated that Social Security pay the shortfall of $2 million once the $1.9 million runs out.
These two legal mandates, said SSA Chairman Ngiruchelbad, are conflicting and place SSA Trustees in a “legal predicament”.
A letter from two retirees, Rebechoraidung Joel Toribiong and Mudlong Salvador Tellames, to SSA Chairwoman Ngiruchelbad, expressed concern that their SS retirement funds are being used to pay the supplemental benefits without an actuary study, placing their retirement funds in jeopardy.
Senator Inabo in response to the retirees’ letter of concern said that there was an actuary study done by Callund Consulting Ltd. in 2021 that included the evaluation of the Supplemental Benefits. She said that the study recommended automatic inflation adjustment to the benefits.
“Due to lack of automatic inflation adjustment to the benefits, it has become attractive for politicians to use $50 benefit payment as [a] political tool to campaign for retirees’ block vote,” said Senator Rukebai Inabo in an email to both Mudlong Tellames and Rebechoraidung Toribiong.
The February 2021 actuary study projected that “if inflationary increases were to be awarded to all pensioners over the coming years, the fund would be exhausted in 2034.” Furthermore, in addition to inflationary adjustment, it said, “if the supplemental benefits were also to be included without Government support, the fund would run out around 2031.”
President Surangel Whipps Jr. said that the quickest way to resolve the issue is to pass the minimum wage which will immediately put more revenue into SS and Pension. But he also said that reforms to SSA must be undertaken by the policymakers for the long-term sustainability of Palau’s Social Security.