Palau collects thousands of dollars every week as part of the customary practice of collective money from relatives to pay for funeral expenses of the departed relatives. 

The House of Delegates of the Olbiil Era Kelulau recently proposed establishing a Belau National Life Insurance System law to help “better provide for funerary expenses and the associated traditional customary practices and better support the surviving family of a decedent,” adding on to the sources of funding for funeral activities.

The proposed system will be offered to citizens of Palau only.  A person has a choice to participate or opt-out.

To participate, an eligible person is required to pay3% of their earned income each quarter to the Social Security Administration (SSA), the identified administrator of the proposed Belau National Life Insurance System.  The employer of each insured person is also required under the proposed bill to contribute 3% of that person’s total remuneration to SSA for the employee.

The bill also mandates that 2% of the amount in the Non-Communicable Diseases Fund at the time of the bill’s enactment into law will be transferred to the SSA to support the program.

If enacted, this will be the fourth (4th) government social program, partially funded by the employer.  The other two programs, Social Security and Civil Service Pension Plan (CSPP), face funding shortfalls, with CSPP facing a reduction of benefits soon unless more funding is injected into it or the entire system is restructured.  The third program, the National Health Insurance, is performing well so far but can easily join the status of the other two programs if costs off-island medical referrals are not contained.

Meanwhile, Palauans continue to leave the island, citing low income and high living costs, including costs of social customary practices that demand they contribute to the social obligations.

Currently, around 16% is deducted from government employees’ salaries and 9.5% from the private sector for the Social Security, CSPP, and National Health Insurance programs.  The deductions do not include income tax expenses that can raise deductions to over 22% of the salary for government and over 15% for private sector employees.

The proposal allows the participant to designate beneficiaries and mandate an actuarial report every two years.

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