The National Civil Service Pension Plan (CSPP) could go bankrupt in the next 9 years, or as early as 2024, according to an actuarial study commissioned by Olbiil Era Kelulau in 2019.
The report shows that the Pension Plan is receiving much less in contributions from its members than it is paying out to retiree beneficiaries each year. The difference is nearly $5 million dollars, requiring the Plan to pull out money from its investment to pay benefits. This process is eating up the investments, and at the current rate, is expected to be depleted by 2024.
For example, for FY 2021/22, total contributions expected is $7.8 million while expected payouts is $14.5 million, leaving a shortfall of $6.7 million. The National budget this year appropriated $2.6 million to subsidize the shortfall with the expected difference to be drawn from the invested assets of the funds.
At the rate the invested assets are being withdrawn to fund the difference in benefit payments, after 2024 those who are currently contributing to Pension or currently receiving Pension benefits will not receive their Pension benefits.
The actuarial proposed four short to medium term solutions for the fund, but stated that a longer term solution will still need to be found after year 9 or by 2030.
The four proposals include changing the plan to Defined Contribution, extending the plan to the private sector, increasing the retirement age, and reducing the amount of the current benefit. Even with all of these, by 2030 the fund is expected to be exhausted and therefore a long-term solution will be needed.
The Senate has re-introduced a bill that proposes the solutions recommended by the report. The bill was assigned to the Senate Ways & Means Committee, chaired by Senator Rukebai Inabo. (By: L.N. Reklai)

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1 Comment

  1. This is nothing new! Ever since its inception, there has always been a deficit and OEK was supposed to do annual appropriations to fund that actuarial deficit, but it has been left to accumulate to this point. Yet nothing is being done. And as a republic, we continue to borrow money today at the expense of our future generations!

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