Once again, Olbiil Era Kelulau (OEK) leadership is demanding that Chairperson Johana Ngiruchelbad and members of the Palau Social Security Administration Board of Trustees (SSA), rescind their decision and “withdraw the public announcement with all possible haste,” otherwise face legal consequences.

Last week, the Palau Social Security Administration informed all SS beneficiaries that SSA would no longer pay out the $50 monthly supplemental benefit effective October 14. The Social Security Administration cited that the ROP SSA Actuarial Study of 2020 showed that the Fund would collapse if it continues current practices. 

The $50 monthly supplemental benefit created by law was funded directly by government appropriations as a supplement to what SS beneficiaries were already receiving based on their contributions.  The government was able to appropriate $2.4 million each year, in 2020 and 2021, from the national budget to fund this supplemental benefit.  In FY 2022, RPPL 11-13 passed mandating SSA to pay the supplemental benefit from SSA’s funds should the government appropriations fall short.

In their letter, Senate President Hokkons Baules and House Speaker Sabino Anastacio said that “withholding these benefits risks literally taking food out of mouths of retired and disabled beneficiaries.”  Furthermore, they added that withholding the supplemental benefits would violate Social Security Administration’s legal responsibilities.

OEK leaders contend that SSA Board has no authority to suspend or terminate benefits set by law.  SSA authorities under the law, according to the OEK letter, include “power to determine who is a valid Social Security Beneficiary,.. invest assets of the Retirement Fund within guidelines set by law. 

Under the FY 2023 national budget, the government appropriated $1.2 million to pay for the $50 supplemental for old age insurance and disability.  The funds for this budget item come from the Fisheries Protection Trust Fund.  This is a separate monthly supplemental benefit from the $50 monthly supplemental benefit that all SSA beneficiaries receive.

The SSA Board of Trustees argues that its primary role under the Social Security Administration’s Act is to ensure the health and sustainability of the Retirement Fund and that the SSA law requires an actuarial study before changes are made to the benefits.  The laws that created the additional monthly benefit payments were made without an actuarial study.

As a result of the COVID-19 impact, the number of contributors (employees) to SSA has dropped by about 1,000, resulting in fewer contributions collected.  SSA is receiving less money and paying out more, and with a looming recession, it is bracing itself to lose some of its investments in the market.  SSA Board said it is ‘bound by our fiduciary duty to safeguard the SS Fund and we simply can’t allow further depletion of the SS Fund.”

President Surangel Whipps had submitted a bill dubbed “Social Security Stabilization & Continuity Act” to help make SSA sustainable “without backing or funding from the national government.”  The bill is at the second reading in the Senate.  This SSA reform bill will address these new funding obligations, raises the retirement age to 65, and increases employees’ SSA contributions from 7% to 9%.

“The Olbiil Era Kelulau shares your concern for the long-term health of the Retirement Fund…Olbiil era Kelulau is taking all possible actions, both publicly and behind the scenes to secure the future of the Social Security Retirement Fund,” stated the OEK letter.

It added, “We acknowledge that your proposed action appears to be motivated by this same concern. However, we cannot allow the well-being of thousands of citizens to be threatened by the premature action proposed in public and behind the scenes, to secure the future of the Social Security Retirement Fund.”

This would be the third time that the SSA Board of Trustees and Olbiil Era Kelulau (national congress) tussled over the $50 monthly supplemental benefits to SS beneficiaries.  Each time SSA Board informs the public that they cannot fund the additional monthly supplemental benefit from the SSA fund, they will stop it. And each time Olbiil era Kelulau moves to stop SSA from cutting off the supplemental benefit payments.  This occurred in Feb 2021 and again in April 2022.

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