FSMSSA QUARTERLY TAXABLE WAGE BASE TO INCREASE EFFECTIVE JANUARY 1, 2023
Fsmssa board of trustees chairman and deputy administrator attends workshop
FSMSSA was invited by the Pacific Financial Technical Assistance Center (PFTAC) to participate in a workshop in Majuro, September 18-20, 2019. The workshop was a joint event organized and delivered by three PFTAC programs including Real Sector Statistics, Revenue Administration and Macroeconomic Programming. The purpose of the event is to bring together senior tax administration officials with senior officials from the National Statistics Offices of all PFTAC member countries to discuss the of ‘Use of Administrative Data in National Accounts’ particularly the importance of effective mechanisms for the secure sharing of tax and social security data with National Statistics Offices (NSO).
Chairman Harris and Deputy Ilai joined discussions over the course of the workshop from beginning to closing. It was for the program’s benefit that attending such workshops are highly recommended to the leadership of the program. The program always builds up its strength in such trainings and workshops. The presentations given were fully effective to building and refreshing knowledge of participants. FSMSS program looks forward to attaining its stability from all these resourceful information and on those who gained them to support the program with.
Administrator presents at northwest Leadership conference 2019
In the early weeks of September, FSM Social Security Administrator Alexander R. Narruhn attended the Northwest Leadership Conference 2019 on Makur Island, outer islands of Chuuk State. Administrator Narruhn shared a presentation to the large group, an overall presentation based on functions of the program. Detailed information about social security benefits were discussed, including eligibilities to retirement and other types of benefits. The different types of benefits were introduced with its requirements. Administrator’s presentation touched on the program’s Financial Statements audited and unaudited from 2016 to 2019 as well as its Investment Fund Performance. Tax collections especially delinquency was introduced as it remains a major problem to the program’s tax collections. Along with the challenge of delinquency, FSMSSA also face more of which, benefit payments exceeding tax collections, downsizing of government and closing of several major businesses, increase number of beneficiaries and low funded ratio, high unfunded accrued liability. These challenges are on hand and as much as the Administration tries to battle with, still comes on the way due to the giving and receiving processes of the program. Therefore, the program gives more than it collects. Otherwise, the Administration never gives up fighting these challenges finding ways to support the program and keep on right track to its purposes. Lastly, there are pending amendments in process to support the program in every way possible for its longevity.
FSMSSA Employees attends APIPA 2019
The Association of Pacific Islands Public Auditors (APIPA) was formed in January 1988 through a Memorandum of Understanding (MOU) that was executed by the heads of the audit organizations of five Pacific Island nations. It was formed to achieve its objectives, mainly to establish an organized body to act as one voice in support of the goal of promoting efficiency and accountability in the use of public resources of emerging nations of the Pacific. It is a way to provide a forum for the exchange of ideas, experience, problems, and the identification of solutions which are often unique to the Public Auditors in the Pacific and sponsor auditing and accounting training workshops, in cooperation with established associations of the staff of member offices. Inclusive purposes includes identifying scholarship sources for Pacific Islander in need of financial assistance to study auditing and accounting at the post secondary level and promote public awareness for the purpose of conducting audits of public resources. Each year the APIPA Conference serves as the region’s premier professional development event for finance and audit professionals from throughout the U.S.-affiliated Pacific islands.
Whereas, eight (8) employees from FSMSSA inclusive of the branches attended the training, seeking more skills and knowledge to further their abilities in the area of their job goals they serve in this entity. These trainings at APIPA is always a way to refresh and help them carry on doing the best they could in their expertise. It was indeed a great experience to the first goers, and continuing assistance to those been attending. They were all grateful to be attending sessions that greatly impact their knowledge which motivates them to serving the clients of FSMSSA the best way they can offer.
FSMSSA Board of Trustees meets for 2nd regular meeting
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.
FSMSSA attends Public Hearing with Health & Social Affairs Committee
FSM Congress committee on Health & Social Affairs called for a public hearing on May 17, 2019. FSMSSA responded with the presence of Mr. Jack Harris, Chairman of the Board of Trustees, Board Member Mr. Nakama Sana, Administrator Alexander R. Narruhn, and Deputy Administrator Francky Ilai. FSMSSA comptroller Ms. Tessie Dayao was in attendance. Committee members present included Chairman Ferny S. Perman and member Paliknoa K. Welly along with two Congress Legal Counsels. The committee needed program updates especially on Financials of the FSMSSA. Administrator Narruhn presented figures that opens minds giving information that could be addressed to the whole Congress about the financial status of the FSM Social Security Program. With the exchange of questions and answers, both parties were satisfied on the given information, whereas, FSMSSA looks forward to the continuation of the subsidies given by Congress to support functions of the program, especially with any type of benefit.
FSMSSA Pohnpei participates in Women’s Day 2019
FSMSSA was invited to do presentations at the 2019 Women’s Day Conference on March 7, 2019 at the State Governor’s conference Room, whereas, Pohnpei Branch Manager Leon Panuelo Jr. and Assistant Manager Trueleen J. Albert were present. An overall presentation of the program was given, consisting, the history and objective of the program, financial statuses, Benefit types and specifically the types of benefits and procedures to applying and all regulations in line to uphold the informative part that people needed to know and understand. After the informative presentation, the crowd raised tons of questions mostly regards to Benefit Claims and Tax Paying. To their surprises, many had just learned new information the public were never aware of. the productivity of the day rested in the hands of all the women who happened to be there for they were intended to push out their complains and comments. All were accepted by FSMSSA team, looking forward to a down drop of questions in the future. That concluded the presentation and requests were made for future awareness always.
United States Department of Interior gives grant to Social Security Programs
The Prior Service Trust Fund (PSTF) is a supplemental retirement, disability and survivors’ plan established pursuant to Section 105(m) of U.S Public Law 99-239. It was established to continue to provide benefits to those who worked for the U.S. Navy Administration or the Government of the Trust Territory of the Pacific Islands for at least five years prior to July 1, 1968. In 1987, the United States Congress provided $8 million for initial capitalization of the PSBTF. The United States Government continues to meet its commitment and financial support to beneficiaries. These Prior Service beneficiaries are retirees and survivors who rely on monthly payments ranging from $54.00 to over $150.00 to pay for medicine, food, kerosene and other basic needs.
Effective April 1, 2006, the Federated States of Micronesia Social Security Administration assumed responsibility for benefit payments made to citizens of the Federated States of Micronesia. Beneficiaries of PSTF total about one thousand and lived in the Northern Mariana Islands, Republic of Palau, Federated States of Micronesia and Marshall Islands. FSM has a total of 450 beneficiaries who are currently receiving Prior Service Benefits.
In May 2016, the United States Department of Interior, Office of Insular Affairs (OIA), awarded additional money to the Prior Service Trust Fund Administration (PSTF) to enact and fully fund an increased cost of living adjustment (COLA) for all existing PSTF beneficiaries. It was an addition to the annual funds being received from OIA to maintain existing payments to PSTF beneficiaries.
In March 2018, the Prior Service Trust Fund (PSTF) was awarded funding through the office of Insular Affairs’ (OIA) Technical Assistance Program. A grant was awarded to fund Prior Service benefit payments to beneficiaries in the Commonwealth of the Northern Mariana Islands, the Federated States of Micronesia, the Republic of the Marshall Islands and the Republic of Palau. The grant included a partial funding award of $460,900 for PSTF benefit payments, will be available for the first six months of the next fiscal year. Additional funding will be awarded after OIA has received full appropriations for Fiscal Year 2018.
In April 2019, the Prior Service Board of Directors and staff wished to announce that the U.S Interior Assistant Secretary of Insular and Internal Affairs, Douglas W. Domenech has authorized the payment of $853,590 in FY 2019 Technical Assistance Funding for the Prior Service Trust Fund.
The Prior Service Trust Fund Board and Social Security Administrations take this opportunity to express their appreciation to Assistant Secretary Domenech and staff for providing this valuable assistance to families across Micronesia and beyond.
FSMSSA Board of Trustees meets for 1st special 2019
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.
Beneficiaries to make Changes in Addresses
FSMSSA wishes to extend this announcement to all beneficiaries receiving benefits from the Social Security Program. Due to security reasons, the FSM Social Security Administration will be discontinuing the mailing of physical checks to overseas locations beginning April 2019. Therefore, beneficiaries residing outside of FSM must have a valid bank account to be used for benefit remittances. The program sincerely encourage ALL beneficiaries abroad and on the islands to abide with this recommendation in order to support security improvements. It must be a question raised to why the sudden change, yet due to incidents occurring with lost checks and more than that, FSMSSA intends to verify that the safest procedure is through bank direct deposits. This could also support the less use of paper for printed checks to thousands of beneficiaries. Moreover, the process is that you must have an active Savings or Checking Account. FSMSSA need your account information for confirmation then you could make the change. In doing so, our form had been sent out to all beneficiaries, it is as well posted on our website; www.fsmssa.fm. Please be informed that Joints accounts are applicable to only you and your spouse. On island beneficiaries are highly recommended to have accounts as much as possible. This change would really assist with systems expenses on its operations and a guaranteed timely payout to all beneficiaries and would highly shorten issues with physical checks. For further questions and comments, please contact us through e-mail or phone. Thank you.