Palau Government Allegedly Overdue With Pension Payments

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‘Cash flow issues’ blamed for late remittances to retirement fund

By Aurea Gerundio-Dizon

KOROR, Palau (Island Times, July 7, 2012) – The Palau government’s payable to the Civil Service Pension Plan has already totaled $3,928,490 as of Wednesday.

Pension Plan’s Administrator Presley Etibek said in an interview that the government’s due contribution to the Plan totaled $3,256,106, plus accrued interest of $672,384.

In an inquiry with Bureau of National Treasury Dir. Marino Rechesengel, he said that the government made four payments in June, totaling to $566,825.

The government also paid to Social Security (SS) in June in the amount of $548,996.80 and $327,270.53 for Health Insurance.

But according to Etibek, although the government has made payments in June, it is still behind 23 pay periods.

Etibek is hoping that the government will make additional payments. He said the policy is that three days after disbursing the payroll, the government should remit to Pension. Last pay day was June 29, so the government was supposed to remit to Pension last July 2.

Asked why the government has been behind for 23 pay periods, Rechesengal said it is because of "cash flow issue."

Etibek expressed worries that, with the government’s delinquency in payment of the amount it owed at present, the Plan’s investment will soon be drained.

Etibek said that despite the government’s delayed payment, the retirees continue to get their monthly check. The Plan withdraws from its investment to pay retirees’ benefits.

Beginning this fiscal year (October 1) up to July 2nd, Etibek said, the Plan has already withdrawn over $3.8 million from the investments to cover the benefits.

The International Monetary Fund reportedly projected that if the Plan continues to withdraw from its investments to pay benefits, the investments will be drained within 10 years.

Etibek said he will keep asking for inclusion of his request for appropriation to the Plan in the Fiscal Year 2013 National Budget, since the request has not been accommodated in the supplemental budget bill.

Furthermore, Etibek appealed to lawmakers to enact a legislative measure to amend the contribution level from 12 percent to 20 percent over the next four years. At 20 percent, the Plan will reportedly realize a positive cash flow.

With regards to contribution to SS and healthcare, the government still has to remit $3,067,497 for employees’ SS and $130,650.38 for healthcare, according to Treasury’s records.

Island Times tried to verify the figures with SS but authorized officials from SS Administration were not available for interview as of press time.

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