Cabinet approves establishment of Social Security Reform Commission (posted September 30, 2010)
During its September 13, 2010 meeting, the Cabinet approved the establishment of the Social Security Reform Commission (SSRC).
The main task of the commission is to conduct a comprehensive review of the present social security system and to provide Cabinet with recommended amendments to the Social Security Act of 1990, as amended, which will ensure the viability of the Retirement Fund in the immediate and long term.
The seven-member commission is comprised of:
- Public Works Minister Maynad Alfred (Chairman),
- Senator Donald Capelle,
- MISSA Administrator Saane K. Aho
- Deputy Chief Secretary Jorelik Tibon,
- Carlos Domnick, CEO of Anil Development Corporation
- Ben Chutaro, Consultant
- Sultan Korean, BOMI Chief Compliance Officer
The SSRC will focus on the following main areas:
Main objectives:
1. Assess the financial condition of the Retirement Fund in conjunction with a comprehensive review of parts IV to VIII of the Social Security Act of 1990, as amended (MIRC Title 49 Chapter 1). Focus will specifically address the following issues:
- Sufficiency of the 7% SS tax rate in light of a steady growth of benefits and stagnant workforce;
- Cost analysis of various benefit programs – old age retirement, medical retirement, survivor (spouse and dependent children) and lump sum;
- Review soundness of investment strategy, advisors and potential for increasing investments in RMI (locally vs. offshore);
- Work with MISSA management to suggest a possible percentage reduction in administrative expenses.
2. Provide recommendations to the Cabinet on amendments to the Social Security Act of 1990, as amended. Such recommendations will be accompanied with cost analysis of the changes and their financial impact on the Retirement Fund in the immediate and long term (first year of implementation and onward). Focus will specifically address certain amendments to provisions on contributions, investments, benefits, offenses and penalties, etc.
3. A feasibility study on converting younger workers to a defined contribution (DC) plan and design of new DC plan. Focus will specifically address the following issues:
- a buy out scheme for younger workers (i.e. cashing out earned quarters from Retirement Fund corpus and transferring dollar value to new DC plan.
- Establish a contribution and benefits scheme to new DC plan;
- Provide an impact study on the Retirement Fund if migration of younger workers to DC plan occurs and remedial steps to prevent further losses in contributions to the Retirement Fund in order to ensure its viability.
- Public awareness campaign/engagement – a schedule and description of public awareness activities will be provided in the report.