SS annual benefit payments exceed contributions by over $3 million in 2016
No unresolved findings of FY 2016 audit
By: L.N. Reklai
July 17, 2017 (Koror, Palau) Social Security Administration annual benefit payments exceeded contributions by over $3 million dollars for 2016 according to independent audit report on FY 2016.
Benefits increased by over 50% under RPPL 9-11, 9-12, 9-35, 9-46, 9-55 and 9-62, exceeding the amount of contributions. “Contributions on annual basis are no longer sufficient to pay annual benefit payments due to current beneficiaries” states the report. [restrict]
In FY 2016, Social Security collected over $14 million in contributions and paid out $17 million in benefit payments.
Social Security said it focused on collections of past due and an effective cash management on monthly basis as means to address this. It still withdrew $3 million from investment in 2015 to cover the 2016 shortfall.
Despite this shortfall, audit report shows that Social Security earned over $6 million income from its investment in 2016, or its investment grew by 6.70%. This growth is attributed to the investment’s diversified asset allocation.
“Fund performance is viewed as positive as there was no impact on original cost of portfolio given the diversified asset allocation.”
Social Security withdrew again $1 million from investment in May of this year to cover shortfall in benefits payout due to change in retirement age from 62 down to 60 under RPPL 10-3.
According to actuarial valuation performed in 2015, SS unfunded liability continues to increase and weakening the Fund sustainability for the long term. Report shows deterioration of the funded ratio to 34% from 46% in 2013 before increase of benefits.
To address this, SS Board of Trustees position is to avoid withdrawing from investment funds in the next 7 to 10 years to positively grow the Fund. The SS Fund will be considered sound once it reaches a 79% funded ratio.
As of 2016, Social Security Administration’s investment portfolio was at $90,541,549 million with 6.67% return on investment. In 2015 it had -1.55% ROI and in 2014 it had 10.61%.
Currently, over 71% of benefit payments are for retirees, 26% are for survivors, and disability benefits is 3%.
Independent audit report of Social Security Retirement Fund of FY 2016 states that there are no unresolved findings from prior year audit of the Fund. [/restrict]