Category Archives: Board News

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FSMSSA Board of Trustees meets for 2nd regular meeting

Category : Board News , Press Releases

The FSMSSA Board of Trustees held 2nd Regular Meeting in Chuuk on May 22-23, 2019. Every of these board meetings are held quarterly in and around the four states, as there may be a need to follow on pending appeal cases. With such matter, every quarter a Board meeting is called and inclusive of a special meeting when necessary. In attendance to this meeting were Chairman Harris, Vice-Chairman Tafileluw, members Sana, Nena, Falcam, Administrator Narruhn as Ex-Officio member, Deputy Administrator Ilai and FSMSSA Internal Auditor Win Thomas.

The Board were updated on FSMSSA division reports, mainly Financial and Tax Reports. The financial report specifies its net assets standing at $53.2 million as of March 31, 2019. Of this amount $48.6 million is accounted for the investment market value. The remaining $4.6 million represents cash, accounts receivables, travel advances, fixed assets and other assets. Liabilities of $148,031 include accounts payable to vendors, payroll liabilities for unremitted taxes, and payable to beneficiaries. Revenue grew by 5.7% to $5.0 million compared to $4.70 million in the same period last year. The increase is attributed mainly to the timing of Government bi-weekly payment in particular the Pohnpei State and Yap State which paid most of their 4th quarter 2018 taxes due January 2019. Benefits grew by 1.7% to $5.5 million compared to %5.4 million in the same period last year. The increase benefit is attributable to new claims and from retirees’ eligibility back to 100% of benefits. Administrative expenses amounted to $264,556 which represents 20% of the approved budget of $1.31 million. In March 2019, $1.0 million has been withdrawn from the investment portfolio to supplement benefit payments. Cash flow shows the actual sources and uses of cash. Collections were not enough to pay benefits and administrative expense, hence a cash deficit of $764,494. The cash deficit was funded by withdrawal of $1.0 million from investment trust fund.

Tax collection remains a challenge the program tackled with every day following its regulations on tax collection. As of 1st quarter 2019, FSMSSA’s total tax receivables was $5.2 million, which is 4% lower than the same period of last year. The major cause of this decrease has to do with lump sum payment of $254,228.83 to some companies in CY2018. The program’s tax collections struggles with out of the overall  delinquent employers, $3.3 million are either closed or inactive employers. About 64% of the total delinquent tax goes to these doubtful accounts and $1.9 million goes to businesses that are still operating and are currently able to pay off or make allotments to their delinquent balance. Still partial collections had been made up to 6% as of 1st quarter 2019 and FSMSSA Tax Division continues to push for more effort in collecting from refereed accounts.

FSMSSA Board of Trustees also had taken care of old or unfinished businesses along with new businesses and had received knowledge of recent communications and incidental report from Administrator Narruhn, inclusive of Social Security Amendments, results of public hearings and pending matters needed of Boards’ attention.

Finally, pending appeal cases were deferred to its special meeting in Kosrae, June 2019.

 


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FSMSSA Board of Trustees meets for 1st special 2019

Category : Board News , Press Releases

FSMSSA Board of Trustees had its 1st Special Meeting on February 14, 2019. In attendance were all members including Chairman Harris, Vice Chairman Tafileluw, members Sana, Ned and Falcam along with ex-officio member Administrator Narruhn and Deputy Administrator Ilai. There was quorum so the meeting carried on with its Agenda. A major part of the meeting was the 2019 Investment Review, which also took place. A presentation was given by FSMSSA’s Consultant Daniel Roland, focused on the system’s portfolio performance, Investment Policy Statement (IPS) percent reduction and performances of money managers. Another presentation was on the Experience Study and Actuarial Valuation and was given by Brent A. Banister from the Actuarial Study Group. Details were to be put into report. Moreover, the board had heard and gained information needed from such crucial presentations and were now clear on where FSMSSA is heading in such areas, therefore had passed changes to Investment Policy Statement. The Board’s agenda carried on as usual, briefings and comments were made. Administrator Narruhn further discussed specific issues including money managers put on watch as well as the Valuation and Actuarial Experience study hoping for the support of FSM Congress to pending bill. Narruhn shared the ongoing projects for FSMSSA to be able to use the laser printer and software upgrade. He then discussed ongoing issue of the need to do electronic payment whereas abroad beneficiaries were being encouraged to switch to bank accounts. Lastly, as always, FSMSSA’s Financial Statement and Tax Reports were shared with the Board of Trustees to be reviewed and do communication with comments if there may be.

The need for the special meeting had been met and meeting was adjourned.

 


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FSMSSA Board of Trustees meets for their 3rd regular

Category : Board News , Press Releases

FSMSSA Board of Trustees had its 3rd regular meeting on December 3, 2018. All board members were present as well as Administrator and Deputy Administrator. It became common that every quarter, the Board meets to share updates, reports and exchange advices pertaining social security’s sustainability. It is another chance for FSMSSA Admin to update the Board of Trustees on matters or new information there may be. In return as the governing body of the program, the Board makes fair decisions for a better program. In line with the updates from Admin, Administrator Narruhn spoke of recent communications as of date. Narruhn further discussed some items in his communication, which included the progress of the lot, or office space to be provided by Pohnpei State Governor. Administrator had assisted with documents needed and asked the board to support the idea in communicating with the State Government. Narruhn assured the Board that the experience study had been finalized, and valuation first draft completed awaiting for more detail in a later meeting. Administrator shared the status of the amendments introduced with Congress last session. A major part of this regular meeting was about the FSMSSA 2019 Proposed Budget.  Public Law 5-120 mandates FSMSSA to present an annual budget not exceeding 11% of projected income for the ensuing fiscal year. Administration prepared budget comparisons of CY 2018 vs. CY 2019 and presented to the Board, which was thoroughly explained in details that the Board came in meets in the end by approving the FSMSSA Proposed Budget CY 2019. The percentage of Proposed Budget was 6.9% of income projection. The Budget Ceiling of 11%, with total proposed budget of $1,311,974, a decrease of 1.0% from 2018 approved budget. The meeting continued with FSMSSA’s Financial Statement and Tax reports. The Board of Trustees were well informed that with their queries being answered, and called off a productive meeting.

 


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FSMSSA Board of Trustees & Admin attends APAFS 2018

Category : Board News , Press Releases

The FSMSSA Board of Trustees and Administrator attended the 18th Annual Pacific Region Investment Conference, envisioned to be the premier investment conference in the region. Through this medium, Asia Pacific Association for Fiduciary Studies (APAFS™) , provided members with meaningful educational forums that cover the most current and fundamental understanding of their roles as fiduciaries, focusing on regional specific issues and needs. The goal of APAFS is to raise the level of understanding and standards of practice among fiduciaries in the region by providing educational programs and opportunities, so that they may provide the most prudent stewardship of the funds entrusted to their care. As the governing body of the FSMSS program, it had become tradition that the Board of Trustees and Administrator attend such conferences for positive and enhancing purposes in chances that kept accountable for the program’s sustainability. In attendance were Chairman of the Board Jack Harris of Pohnpei, Vice Chairman Vincent Tafileluw of Yap, member Albert Falcam-National Government representative, Chuuk representative, member Nakama Sana, and member Nena C. Ned representing Kosrae State. Along with the Board was Administrator Alexander R. Narruhn. With the information attained and knowledge gained from these conferences, FSMSSA continues to trusting in the hands of its Administration for the successes of the program through daily work of all Board members and Administration.

 


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Board of Trustees Member- Kosrae represent

Category : Board News , Press Releases

Mr. Nena C. Ned of Kosrae State was confirmed by the FSM 20th Congress to serve as member of the Federated States of Micronesia Social Security Board of Trustees, representing the state of Kosrae. Pursuant to section 701 of Title 53 of the Code of the Federated States of Micronesia, the President shall appoint the members of the Board of Trustees for the FSM Social Security Board, subject to the advice and consent of congress. Mr. Ned has professional experience and qualifications which make him a suitable candidate to serve as a member of the FSM Social Security Board of Trustees. He was once a long time member of the program Board of Trustees in 1997 to 2003. Mr. Ned not only served as Board member to FSMSSA, but also to other entities in both the State and National level back then. Additionally, he had worked for the nation ever since 1980’s and presently he is the General Manager for Kosrae State Terminal & Stevedoring Company. Obviously, he had been serving the FSM and State government for a long time now. Mr. Nena Ned owns a Bachelor of Science Degree in Criminal Justice along with other certifications of accomplishments. Personally, Mr. Ned’s hobbies include fishing and baseball.

 


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FSMSS Board of Trustees Meets for CY2017 Annual Investment Review

Category : Board News , Press Releases

Annually, the board meets to review the FSMSS investment portfolio with its investment consulting firm, Raymond James. During the meeting, the performance metrics for the previous year are reviewed in detail and presentations are heard from the portfolio’s investment managers. The portfolio has the usual asset classes including US equities, US fixed income, international equities and two alternative investment classes. These classes are further broken down into eight sub classes to allow for the most optimum diversity to ensure that the portfolio achieves a nominal return rate of 7.5% while keeping risk at an acceptable level.

The Annual Investment Review for CY2017 took place in Guam on February 8 and 9, 2018. Present at the meeting were Chairman of the Board and representative of Pohnpei, Jack Harris; Vice-chairman of the Board and representative of Yap, Vincent Tafileluw; representative of the National Government, Kohsak Keller; representative of Chuuk, Nakama Sana; and Administrator Alexander R. Narruhn serving as ex-officio member.
Daniel Roland and Jayson Miyashita of Asia Pacific Group, Raymond James facilitated the meeting as the portfolio’s full time investment consultants.

As of December 31, 2017, the portfolio was valued at $51,456,340 after a stellar year that saw a gain of 15.26%. This rate of return outperformed the policy index which was at 12.15% and exceeded the portfolio’s target performance of 7.5%. The best performing asset classes were stocks or equities which performed quite well during the year in the market overall. 2017 was also a good year for international equities which saw a rate of return of 27.46%.

The money managers that the board met with included representatives from Winslow Capital, Aristotle Capital Management, Tortoise Capital, Renaissance Investment Management, Adelante Capital Management and Garcia Hamilton & Associates.

During the meeting, the board decided to terminate the services of small/mid-capitalization core equity manager Golden Capital Management due to the fact that it had not sent representatives to the annual investment review for the second year in a row. The board decided to transfer 5% of the portfolio under Golden Capital Management to Renaissance Investment Management for investment in the international equity space and authorized the remainder of the funds with Golden Capital Management to be invested in the small/mid-capitalization core index.
The board members were pleased with the performance of the portfolio and encouraged the investment consultant and money managers to continue in their efforts to ensure that the portfolio continued to meet its target earnings.


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FSM Social Security Board of Trustees and Administrator attends APAFS 2017

Category : Board News , Press Releases

The Asia Pacific Association for Fiduciary Studies (APAFS) is a Guam based 501(c)3 non-profit educational and charitable association. APAFS was founded in 2000 by a forward thinking group of fiduciaries representing public and private institutional funds from throughout the diverse geographical area of the Asia Pacific
Region. Every year, FSM Social Security Board of Trustees and Administrator came in attendance to the 17th PRIC conferences. As the building body of the system, it had been a priority to extend their knowledge in every corner possible. They attended the educational expertise with APAFS to build more understanding and familiarize with the standards of practice among fiduciaries to continue the care for funds within the Social Security System. As an outcome to attending such conferences, FSMSSA looks forward to their more accomplishments in their learning process as to become AIF designees. The goal of APAFS is to raise the level of understanding and standards of practice among fiduciaries in the region by providing educational programs and opportunities, so that they may provide the most prudent stewardship of the funds entrusted to their care.

As a result, FSMSSA Administrator Alexander R. Narruhn is currently serving as a member of APAFS Board of Governors.


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FSMSSA Board of Trustees holds its 4th Regular Meeting

Category : Board News , Press Releases

FSMSSA Board of Trustees 4th regular meeting was held on December 4, 2017 . All board members including Chairman Jack Harris, Vice-Chairman Vincent Tafileluw, member Nakama Sana, member Kohsak Keller and ex-officio Administrator Narruhn were present including two FSMSSA staff, Comptroller Teresita Dayao and IT Manager Midion Neth Jr. The agenda was met as they entertained new business, which was based on Calendar Year 2018 proposed budget and very crucial items which needed discussion. The meeting followed the Board’s usual Agenda. Administrator Narruhn did an update, briefing the history of the system. The FSMSSA is one of the successor systems from the former Trust Territory Social Security System that closed its operation on March 31, 1988. The FSMSSA began its full operation on January 1, 1988. It is financed by employer/employee contributions at a rate of 7.5% each effective January 01, 2013. National, State, Municipal Governments and all private employers incorporated or doing businesses in the FSM are subject to social security tax. Effective January 01, 2018, the quarterly taxable wage will be increased to $8000. It is estimated that an additional tax collection of $143,850 will be generated from the increased quarterly taxable wage. The FSMSSA provides four basic benefits; retirement, disability, surviving spouse and surviving children’s benefits. The average monthly benefit payment for the ten-month period ending October 31, 2017 was $1,723,763 compared to $1,658,065 for CY 2016 or an average of 4% increase. Furthermore, the challenge remains, where every year benefit payments increase, therefore FSMSSA tries its best to make accommodations that would assist the longevity of the program. FSMSSA continues to assume responsibility for the Prior Service Trust Fund to its citizens even with the continuous funding by the US Congress and Department of Interior, and Insular Affairs. Department of Interior approved the funding request presented by PS Administrator Jerry Facey and Administrator Narruhn in May 2016, on behalf of all beneficiaries, for a cost of living allowance for all recipients of the Prior Service Program. The minimum benefit per month was increased from $27 to $50. In addition, Department of Interior also approved an ongoing annual cost of living adjustment of 3%. Funds received under the PSTF for the ten month ending October 31, 2017 amounted to $312,100 while benefits paid for the same period totaled to $227.793. The program awaits two pending bills in place, therefore if passed, the system shall have a sustainable future. An important matter also discussed was based on the planning and construction of a new office, which by now, the lot is in place. Other dreams came upon as, if the new building comes in place, another 5 year planning will be at hand, which is to accommodate a Credit Union within the new HQ office for our beneficiaries and participants. The Credit Union in a sense will benefit both the program and its people. At the offset, the highlights of FSMSSA financial report and Tax report were shared and discussed.


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FSMSS Board of Trustees Meets for its 3rd Regular Meeting of 2017

Category : Board News , Press Releases

For its third regular meeting of the year, the FSM Social Security Board of Trustees met in Pohnpei on September 9 and then continued the rest of its meeting in Kosrae on September 13.

The meeting was originally scheduled to take place in Kosrae, however, the board felt it prudent to attend to appeal cases which had been recently submitted from the state of Pohnpei.

Present at the meeting were Chairman Jack Harris representing Pohnpei, Vice-chairman Vincent Tafileluw representing Yap, Trustee Nakama Sana representing Chuuk, Trustee Kohsak Keller representing the National Government and Administrator Alexander R. Narruhn, serving as ex-officio member.

The major item on the agenda was a number of amendments to the law which Administrator Alexander R. Narruhn had come up with to combat the ongoing challenge of benefit payouts exceeding tax collections. Among the changes was an amendment to the tax provisions to allow collection of social security taxes from fishing vessels within the FSM waters. Early estimates indicated that this would net an additional $1.755 million in yearly tax collections. The administrator said the additional collections would go a long way in helping the program’s shortfall between collections and payouts.

As far back as the mid 2000s, the administration had been withdrawing funds from its Trust Fund to cover the shortfall. The FSM National Government had also been injecting funds into the system for the same purpose. The amendments were aimed at bridging the gap between collections and payouts thereby lessening the need for constant investment withdrawals. The other amendments include placing a cap on benefits, eliminating the taxable wage base, giving more options for retirees and other changes that were designed to help the administration in its efforts to make the system more sustainable.

Narruhn revealed to the board that he would be submitting another bill to congress for a $10 million loan from the National Government. This amount would be invested and earnings from this portfolio would help cover the difference between collections and benefits.

The board expressed its support of the amendments and encouraged the administration to finalize and submit the bills as soon as feasible.

For the last item of the agenda, the administration presented to the board the financial statements and tax collection report for the previous quarter.

The Chairman of the Board, Jack Harris, expressed his gratitude for a successful meeting. The other members echoed this sentiment.