A letter of complaint was sent to Senator Rukebai Inabo by Mr. Isaac Bai regarding Pension Plan. The letter dated August 30, 2021, was written solely for the purpose of opposing the proposal to tax 6% of retirees’ monthly pension earnings.

“I have budget my pension towards electricity, water, telephone bills, internet, and cell phone bills and even gas expenses for a month,” he wrote referring to retirees who cannot afford to have their pensions deducted.

In his letter, Isaac said that Pension Plan was created with the intention that Olbiil ra Kelulau (OEK) allocate seed money into the program. He wrote “since the inception of Pension Plan until today, OEK has not lived up to its obligation” He further said, ” Meng kora mo mekngit a rengud ra waisei, ngera meng ngercheliu el melchang a seed money e elcha komo BELTANG E OBA BLIOU  LOLTOIR ER KEMAM AR MECHEBUUL RETIREES“.

Isaac suggested in his letter, ” Senator I thinks it’s only fair to retirees and employees of the national government if a law is created so that employees continue to contribute 6% whereas the government will pay 15% or 20% as a penalty of Olbiil ra Kelulau for not doing its job”.

As previously reported, following a meeting last July 27, the Pension Plan Board wrote to Senate Ways & Means Chairperson Inabo stating that” President Whipps suggested that the board should consider taxing monthly as follows: Retirees receiving up to $8,000 shall be taxed at 6% and anything beyond $8,000 shall be taxed at 12%”.  President Whipps later clarified that this was a compromise he offered when Pension proposed an increase of 10% which Whipps said that people cannot afford at this time.

Intending that money will return to retirees under the proposed Tax Reform, Civil Service Pension Plan also wrote that “The board is asking that this tax scheme be included in the new tax reform so the retirees may be eligible for some sort of refund at the end of the year”.

Currently, Pension plan collects 7 to 8 million dollars annually in contributions while it pays out to retirees 10.2 million dollars. The 2 other sources of funding for the Pension Plan namely remittance tax and a percentage of the environmental impact fee collected from tourists is still not enough to fill the funding gap. (By: Eoghan Olkeriil Ngirudelsang)

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