Retirement Plan Proposed Legislation Transmitted to Congress
PALIKIR, Pohnpei (FSM Information Service): April 2, 1997 - Acting President Jacob Nena transmitted to Congress Speaker Jack Fritz a proposed legislation that would create a retirement plan for the employees of the Government of the Federated States of Micronesia, according to Presidential Communication No. 9-385, which was introduced as C.B. No. 9-296, and assigned to Judiciary and Governmental Operations and Committee on Ways and Means chaired by Senators Wagner Lawrence and Nishima Yleizah, respectively.
The proposed legislation was drafted under the auspices of the Office of the Administrative Services through Buck Consultants Incorporated of Honolulu, Hawaii.
The plan calls for eligible employees to contribute six percent of their base salary to the program. Older employees, who will not have enough time to accumulate meaningful account balances, will receive supplements from defined benefit pensions. The amount of pension will be determined by compensation and service.
The legislation also proposes a voluntary retirement for eligible employees, without requiring the two years of membership generally required under the bill.
Under the proposal, eligible employees could retire anytime between July 1997 and June 1999, and receive normal or early retirement benefits and be fully vested in their Government accounts.
The consultant estimates that 48 current employees could retire under the proposal at a one-time Government contribution of $320,000, adding that copies of the consultant's report and findings have been distributed by OAS and urging a favorable consideration of Congress.
In a related activity, Acting President Jacob Nena, on March 10, 1997, transmitted to Congress Speaker Jack Fritz a proposed bill which was introduced as C.B. 9-310, authorizing the FSM to borrow approximately $18,000,000 from the Asian Development Bank (ADB) and relend $15,000,000 to the states for the purpose of funding early retirement programs.
The $15,000,000 will be apportioned as follows: Chuuk State Government $5,300,000; Kosrae State Government $2,000,000; Pohnpei State Government $4,200,000; and Yap State Government $3,500,000.
The National Government will assume the risk of gain or loss in exchange rate between Special Drawing Rights (SDR) and U.S. dollars and will relend to the States in U.S. dollars. The loan will have a 10-year grace period with one percent service charge.
The bill provides that the sum of $18,000,000 is authorized to be appropriated in future years when and necessary for repayment of the loan. The bill was assigned to the Committee on Ways and Means chaired by Senator Nishima Yleizah from Chuuk.
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