William Ngiraikelau, CSPP’s Board of Trustees said that the Plan is seeking appropriation for Fiscal Year 2011 budget from the government so that it does not have to dip into its investments.
In years 2009 and 2010, the Plan has not obtained funding from the government, causing it to make investment withdrawals of up to $6,108,000.
The board is requesting an amount of $3,992,850 to cover its expenses for the year.
The Plan’s projected expenditures for Year 2011 is pegged at $8,876,850.
The source of funding of the expenditures will be from contributions from the employer, projected to amount to $2,425,700 and contributions from employees expected to amount to $2,458,300.
However, the amount is not enough to pay for other expenses such as salaries, benefit payments and lump sum death disbursements.
“We are hopeful that given this appropriation for Fiscal Year 2011 the plan will cease drawdown of assets under investment and allow the portfolio to grow. In the absence of this appropriation, the Plan will take this fund from the trust assets under investment: hence put the Plan further in debts,” Ngiraikelau said.
He added that by 2011 , there will be an anticipated number of retiring employees thus a decline in contributing members, reducing inflow of contribution revenue and increase in outflow of funds in benefit payments.
As contributing members retire, their contributions cease and they become pensioners. This causes contributions to decrease and benefit distributions to increase.
The plan’s trust assets have been affected due to the recent global financial crisis in recent months.
Last year the board has already been seeking the government’s help in addressing a debilitation of the plan’s fiscal capacity.
The board said that Palau’s revenue stream produced a negative outflow of funds.
The board said that in the span of 10 years they have withdrawn over $13 million , on top of that the government is not remitting payroll contributions on time and that they stand to collect over $1 million in contributions.
The board is also concerned about the unfunded accrued liability that is reportedly growing every year at a staggering rate.
The board said that as of Oct. 2007, the total accrued liability stood at $95.8 million and the market value of trust assets was at $48.3 million, resulting in unfunded accrued liability (UAL) of $47.5 million.
