Marshall Islands Social Security Administrator Saane Aho and board vice president David Paul briefed the committee Wednesday, painting a bleak long-term outlook for current and future retirees hoping to get a benefit check after the year 2020.
“Social Security will be bankrupt in the near future without action,” Paul said. Retirement agency officials are urging the government to adopt a number of changes, including reducing benefit payments. Aho said the retirement program has money to cover only about 25 percent of its long-term retirement liability of more than $230 million.
The agency provides retirement benefits to nearly 4,000 people in this Pacific nation of 55,000.
This year is the first year since 2000 that the retirement agency is being forced to cash in part of its investment at Bank of Marshall Islands to cover a more than $1 million shortfall. The Marshall Islands Social Security Administration predicts the difference between tax revenue and benefit payouts will rise dramatically to more than $5 million in just three years and will hit $8 million by 2015, forcing MISSA to pull an increasing amount of money out of its $50 million investment fund each year until it is exhausted, Paul said.
Only about half of the businesses registered in Marshall Islands are actually filing and paying taxes, and the number of workers has dropped to its lowest number in six years, with just 9,903 workers paying taxes — all of which adds up to a declining tax base, while benefit payments are growing by a million dollars annually, Aho said.
The government’s health minister, Amenta Matthew, said last month that the cabinet would establish a committee to review the situation and recommend solutions.
