KOROR (Island Times/Pacnews) — President Surangel Whipps Jr. has received the United States’ $20 million grant for Palau’s struggling Civil Service Pension Plan, but the funds come with a key condition: Palau must enact pension reform within one year.
The update was announced at a Nov. 19 press conference, where Chief of Staff Landisang Kotaro reported that the $20 million was handed over during Whipps’ recent visit to Washington, D.C. The money was pledged by the U.S. last year to help stabilize the severely underfunded plan.
Kotaro said the grant will be invested immediately, but neither the principal nor the interest can be used until Palau adopts a formal reform plan. The money is strictly restricted for the Civil Service Pension Plan.
The CSPP, long known to be in crisis, has again asked the Palau National Congress or Olbiil Era Kelulau to appropriate $4 million to cover its 2025 shortfall. The program collects about $6 million annually but pays out roughly $10 million, leaving a recurring $4 million deficit. To close that gap, the Pension Plan has repeatedly withdrawn from its investment fund while also relying on government subsidies that have rarely covered the full shortfall.
According to studies, without major changes the Pension Plan could become insolvent within five to six years.
Last year, the $3 million initially allocated to support the Pension Plan was reprogrammed to purchase a medical house in Hawaii. The change was justified at the time by citing the U.S. government’s earlier pledge of the $20 million grant.
Pressure on lawmakers has intensified as economists warn of the broader economic risks of a failed pension system, and as the U.S. grant condition requires Palau to complete reforms before the funds can be accessed.
