Marshall Islands Retirement Fund Has ‘Banner Year’

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Long term financial problems with fund remain

By Giff Johnson

MAJURO, Marshall Islands (Marianas Variety, Dec. 30, 2013) – The Marshall Islands retirement investment fund enjoyed a banner year in 2013.

The fund, managed by the Florida-based Investor Solutions, earned at over 12 percent for fiscal year 2013, ending the year (Sept. 30) at $59.7 million. And the strong performance of U.S. and international markets continued into October, with the fund increasing to over $61 million by the end of October.

It is good news for the Marshall Islands Social Security Administration or MISSA.

But, said money manager Frank Armstrong, even this type of investment return will not solve the financial problems facing MISSA, problems that need to be addressed through changes to legislation governing the retirement system.

The investment gain over the previous year was more than $6.7 million. But at the same time, MISSA withdrew over $5 million to meet payments to retirees because taxes collected are significantly lower than the amount due to beneficiaries.

"We had a good year," said Armstrong. "It is good news, but it only puts off the day of reckoning. We don’t want to see the fund fail."

A rebalancing of the investments, with MISSA board approval, over the past year, helped to improve the rate of return on the MISSA investments, Armstrong said.

Still, said Armstrong, "as good as our record is, it can’t handle it (the projected beneficiary payments in coming years). Projected benefits will go off the chart."

Recent actuarial reports show that the MISSA fund has only about one-quarter of the money needed to meet its long-term retirement obligations, which are pegged at over $225 million.

Armstrong said that in order to fix the situation, the Marshall Islands will need to make changes to its retirement system. "Without reform — increasing the retirement age, limiting the amount of benefits paid compared to the amount put in by an employee, and other measures — the fund has a limited number of years left."

Actuarial estimates say the fund will last fewer than 10 years unless changes are made to the structure of the retirement system.

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