Igisomar said the Palauan pension officials are interested to learn more about the more self-sustaining Defined Contribution, or DC plan, which the Fitial administration implemented some years ago to stop the bleeding on the financially troubled Defined Benefit or DB plan.
“The Palauan pension trustees requested to meet with us to have a dialogue about the pension system in the CNMI. They would like to have a discussion about the DB and the DC plans, to learn more about our experiences and challenges with those plans,” he said.
Less than 40 percent of the CNMI’s DB plan, which covers those employed since the Retirement Fund’s inception up to 2006, is fully funded.
According to Buck Consultants, the Retirement’s Fund accrued liability as of Oct. 2006 was $987 million but its assets were just worth $473 million.
Its unfunded liability, therefore, stood at $515 million.
The DC plan, which sharply reduced the government’s share in paying for the retirement benefits of its workers, was made available to new hires in 2007.
According to the 2009-2010 valuation report for Palau’s pension plan, the island-nation’s accrued liability for its retirees reached $105.5 million.
Although Palau is still able to pay pension to retirees on time, its retirement program was described as “not actuarially sound.”
Its pension system has been suffering from steadily declining contributions.
