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.