House joint resolution seeks to postpone increase in Pension contribution
Pension Fund net liability at $215 million
By: L.N. Reklai
July 19,2017 (Ngerulmud, Palau) House of Delegates adopted House Joint Resolution 10-11-3 urging Civil Service Pension Plan Board of Trustees to postpone the implementation of employee and employer contributions rate increase for one more year. [restrict]
Civil Service Pension Plan Board of Trustees had approved a rate increase of employee and employer contributions to Pension Plan by 2%, effective October 1, 2017.
House resolution cites that such increase would be a burden on government employees and urge Civil Service Pension Plan Board to postpone the increase to October 2018 while promising to fund the shortfall expected if the rates are not implemented.
The resolution states that OEK is aware that the Board of Trustees is trying to address the growing deficit and keeping the Plan sound and promised to contribute $2.1 million to the fund through FY 2018 budget in lieu of increase of contributions.
Civil Service Pension Plan has been paying out about $3 million more than they collect each year for many years Fund has acquired a huge liability. Government has passed two laws to provide additional source funding to Pension fund, Remittance Tax and Fishing Rights Fees. The collections from these two sources are not enough to cover the deficit.
The proposed rate increase approved by CCPP is expected to continue to raise contributions each year until 2021 when the contributions are expected to match or exceed the amount of pay out of benefits. Independent Audit report on Pension Fund states that its net liability increased to $215 million or 5.51% in 2016.
Civil Service Pension Plan is a pension fund for government employees only. National government, state governments and government autonomous agencies are required to contribute to the Plan. [/restrict]