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Pension Plan and Retirement Fund Amendment, RPPL No. 9-02 2013

PALAU

AN ACT

To repeal Section 3, subsection C of RPPL No. 8-10 and amend Section 2040 of Title 33 of the Palau National Code to eliminate civil service mandatory retirement after thirty years of total service, and for other related purposes.

THE PEOPLE OF PALAU REPRESENTED IN THE OLBIIL ERA KELULAU DO ENACT AS FOLLOWS:

Section 1. Legislative Findings. Since the inception of the mandatory service retirement that requires an employee of the Republic to retire after thirty (30) years of service, the cost of paying pension benefits has far outweighed employee contributions; this financial scheme has increased the unfunded liability of the Civil Service Pension Plan. Accordingly, management of the pension plan recommend the elimination of the mandatory service retirement after thirty (30) years of service and to allow for sixty (60) years of age retirement. These actions will certainly help the government utilize the expertise and knowledge of seasoned employees that the Republic currently fails to maximize during their employment. The Olbiil Era Kelulau further believes that a person with thirty years of experience still has much to contribute; retaining their employment until the age of sixty will prolong their contribution to the plan and thereby allow solvency and continuity of the Civil Service Pension Plan.

Section 2. Repealer. Section 3, subsection C of RPPL No. 8-10 is hereby repealed in its entirety.

Section 3. Amendment. Section 2040(a) of Title 33 of the Palau National Code is hereby amended to read as follows:

"§ 2040. Mandatory retirement age.

(a) All employees who are sixty (60) years of age or older shall retire, except for those in employment positions exempted by the Board or those individuals who receive specific exemptions from the Board. All justices of the Supreme Court and judges of the National Court are exempt from mandatory retirement at the age of sixty (60). All employees under the age of sixty and with thirty years of service may retire no later than December 31, 2013 and receive full pension benefits to which they are entitled. After December 31, 2013 no employee shall be entitled to pension benefits until reaching the age of sixty (60).

(b) [Reserved]

(c) . . .

(d) . . .

(e) . . ."

Section 4. Amendment. Amend Section 2021 of Title 33 of the Palau National Code to limit the amount of benefits to $30,000.00 per year.

"§ 2021. Trust Fund Operation Plan.

(a) . . .

(b) . . .

(c) . . .

(d) . . .

(e) No Member receiving benefits under the Plan may receive greater than thirty thousand dollars ($30,000.00) per year. A prior year of service as an employee may be included in calculating the Member's benefits under the Plan only if the Member's benefits are not greater than thirty thousand dollars ($30,000.00) per year. This subsection shall apply only to members who retire after the effective date of this Act.

(f) The amount of benefits that a Member receives under the Plan shall not be recalculated if the Member is re-employed after the Member begins receiving benefits under the Plan. This subsection shall apply only to members who retire after the effective date of this Act.

(g) A Member shall not receive benefits under the Plan during the time that the Member is re-employed subsequent to retirement. This subsection shall apply only to members who retire after the effective date of this Act."

Section 5. Amendment. Amend Section 2043 of Title 33 of the Palau National Code to provide that the surviving beneficiaries of an employee may only receive benefits up to the total present value of the employee's accrued benefit.

"§ 2043. Death prior to retirement with Survivor Benefit.

Upon death of a Member occurring before commencement of his or her Normal, Early or Late Retirement Benefit or Disability Retirement Benefit, leaving persons eligible for survivor benefits, the following shall be payable:

(a) If the Former Member is not an Employee at his or her date of death and a spouse or beneficiary survives, the death benefits payable shall begin as soon as is administratively practical after the date of the death of the Member. The total death benefits payable under the foregoing sentence shall be the Actuarial Equivalent of the Member's Present Value of Accrued Benefit.

(b) If the Member is an Employee at his or her date of death and a spouse or beneficiary survives, the death benefits payable shall begin as soon as is administratively practical after the date of the death of the Member. The total death benefit payable under the foregoing sentence shall be the Actuarial Equivalent of the Member's Present Value of Accrued Benefit. This subsection shall apply only to members who retire after the effective date of this Act."

Section 6. Amendment. Amend Section 2030 of Title 33 of the Palau National Code to increase the contribution from the government to the Civil Service Pension Plan as follows:

"§ 2030. Contributions.

(a) Employee Contribution

(1) Each employee of the national government and all state governments, as defined by the Board, and any other covered employees including all employees of national and state agencies, without regard to whether the employee is employed part-time, or on a temporary, seasonal or impermanent basis, shall contribute to the Fund by a deduction taken from the payroll of the employee. All persons within the scope of the definition of employees who have any appointment or contract for a term exceeding 90 calendar days or who have held an employment position for a period exceeding 180 calendar days shall be covered employees.

(2) . . .

(b) Government Contribution.

(1) The Government of the Republic of Palau shall make regular contributions to the Fund equal to the amount contributed by each and every employee of the Republic of Palau.

(2) . . .

(3) . . .

(4) . . .

(c) . . ."

Section 7. Amendment. 40 PNC is hereby amended to add the new subsection 1408 as follows:

"§ 1408. Remittance and Money Transfer Tax.

(a) Definitions. As used in this Section, the terms

"Remittance" means to give money or monetary value to a remittance company or bank for transmission to a location outside of the Republic of Palau by any and all means, including wire, facsimile, or electronic transfer.

"Remittance company" means a person engaging in remittance as a service or for profit.

(b) An excise tax of four percent (4%) is hereby levied which shall be assessed and collected monthly against each noncitizen person remitting or transferring money out of the Republic of Palau. Such tax shall be collected by remittance companies and banks and transmitted to the Ministry of Finance on or before the fifteenth (15) day of each month. The Ministry of Finance shall have ten (10) days to remit the remittance and money transfer tax to the Civil Service Pension Plan.

(c) The remittance companies and banks doing business located in the Republic of Palau shall indicate the amount of the remittance and money transfer tax as a separate item on the statement of charges to each customer and shall pay over the tax collected to the Ministry of Finance with the business's revenue tax payment.

(d) Penalties. It is a misdemeanor punishable by a fine not to exceed five hundred dollars ($500.00) for any person to transfer money out of the Republic of Palau on behalf of another noncitizen person in order to avoid the tax levied under this Section.

(e) Exclusions. This Section shall not apply to:

(1) The Government of the Republic of Palau or any department, agency, state government body, or instrumentality thereof;

(2) Remittance made for the purpose of compliance with the rules and regulations of the Federal Deposit Insurance Corporation;

(3) The United States Postal Service;

(4) Remittance made for the purpose of obtaining goods or services for use or sale in the Republic of Palau.

(f) The Ministry of Finance shall promulgate rules and regulations for the collection and enforcement of the remittance tax within 90 days of the effective date of this Act."

Section 8. Effective Date.

(a) This Act shall take effect upon approval by the President of the Republic of Palau or upon its becoming law without such approval, except as otherwise provided by law.

(b) This remittance and money transfer tax will be effective six (6) months after the effective date of this Act.

PASSED: April 26, 2013

Approved this 30th day of April , 2013

_____________/s/_________________
Tommy E. Remengesau, Jr.
President of the Republic of Palau