Marshall Islands Social Security Administration lost $2.1 million in September, most of it from Monday’s drop, reducing from $49.3 million on Aug. 31 to $47.2 million as of Sept. 16.
Two trust funds for the displaced Bikini Islanders were down 11.3 and 9.4 percent for 2008 through Tuesday this week, and Rongelap trust funds were down 6.8 percent through 30 June, with the latest damage from Monday’s stock market plunge not yet available. Four atolls affected by nuclear testing — Enewetak, Bikini, Rongelap and Utrik — maintain U.S.-provided trust funds that are heavily invested in the U.S.
The Marshall Islands government, Social Security program, the College of the Marshall Islands, National Telecommunications Authority and other entities also maintain off-shore stock investments.
The losses “are engulfing everyone who has a trust fund,” said Rongelap Mayor James Matayoshi. “It’s been a huge hit on everyone.” But, he added, Rongelap’s losses have not been as bad as the average for the S&P 500, considered a “benchmark” for comparing performance of stock market investments.
The Marshall Islands government’s trust fund A Account was down seven percent for 2008 through the end of August, dropping from $88.5 million to $82.4 million — before Monday’s additional losses. The D Account, which is funded largely by Taiwan money, rose from $3.4 million to $4.7 million from January to August, which relates to infusion of funding by Taiwan rather than performance of the fund.
Rongelap’s two trust funds were down to $53.8 million at 30 June, from $59.7 million a year ago, though that includes drawdowns that Rongelap uses for operations and quarterly payments to islanders displaced by nuclear testing. This figures does not include substantial losses incurred this week.
Bikini’s Resettlement Trust was $96 million on Jan. 1. But as of Tuesday it was down to $80.7 million, while its Claims Trust Fund was $68 million at the start of the year and is now down to $57 million. Like Rongelap, Bikini also uses money from these investments for its ongoing operations, so the reduction is not all losses.
The drop in Social Security’s investments this week came as the Nitijela, or parliament, was debating a new bill to increase payments to retirees and their survivors. Social Security’s losses were running at about the same as Rongelap’s — 6.8 percent — through the end of August. But stock market problems in September have increased the MISSA loss for the year to slightly over 11 percent.
“This is why we shouldn’t touch Social Security funds,” board chairman Jack Niedenthal said in reference to repeated attempts in recent years by some Nitijela members to change the law to provide for larger payments to retirees.
Monday’s dramatic drop was one of the worst in history, resulting from the collapse of Lehman Brothers, one of the biggest U.S. banks, and the purchase by Bank of America of Merrill Lynch, one of the largest investment firms in the U.S.
All of the Marshall Islands funds have over the long-term been growing in value. Matayoshi noted that investment advisors are saying with the current drop in value in the stock market, this is the time to invest to increase earnings over the next 10 years.
