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Palau Social Security System Amendments, RPPL No. 9-12 2013

PALAU

NINTH OLBIIL ERA KELULAU

Second Regular Session, April 2013
RPPL No. 9-12
Passed as Senate Bill No. 9-45, SD1, HD1, PD1

AN ACT

To amend Title 41, Chapter 7 of the Palau National Code to add to existing benefits, ensure the stability of the Social Security Retirement Fund, to raise the minimum basic benefit, and for other related purposes.

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

Section 1. Legislative Findings. The Olbiil Era Kelulau finds that amendments to the Social Security System are necessary to alleviate hardship with increased cost of living for retirees due to accumulated inflation over the last five years and to ensure the stability of the fund. The minimum basic benefit has not been raised since 2007 and revisions to the basic benefit formula are needed to keep pace with the rate of inflation. The OEK finds it necessary to repeal § 752 subsection (b)  which prohibits a person from receiving two types of benefits at the same time, in order to further assist fixed income families with the rising cost of living. In addition, this bill increases the amount of earnings subject to the earning’s test from $1500 per quarter to $3,000 per quarter in order that retirees may continue receiving benefits while receiving income as a self-employed small business owner or as an employee earning less than $12,000 annually. While increasing benefits to fixed income families, the OEK finds it prudent to increase the maximum amount of remuneration that must be contributed to the social security fund and to add to the definition of self-employed individuals to include officers and partners of organizations, businesses, and partnerships registered in Palau who do not have employees to contribute to the social security fund.

Section 2. Amendment. 41 PNC § 741 is hereby amended to read as follows:

Ҥ 741. Self-employed persons.

(a) A self-employed person shall be presumed to be both his own employer and his own employee, and accordingly is liable to pay to the System with respect to himself for both employer contributions and employee contributions, and shall include himself in reports under section 745.

(b) A self-employed person who has, in a given quarter, at least one employee who receives remuneration from him, shall be presumed to receive in any quarter, as remuneration, twice the amount paid to his highest-paid employee in that quarter.

(c) A self-employed person who has, in a given quarter, no employee who receives remuneration from him, shall be presumed to receive in any quarter, as remuneration, twenty-five percent (25%) of his gross revenue in the preceding calendar year.

(d) Notwithstanding the foregoing, a self-employed retail merchant with no employee who receives remuneration from him and with less than ten thousand dollars ($10,000) of gross revenues in the preceding calendar year or a person working as a farmer, fisherman, or taxi driver, shall have the option to be covered by this chapter, provided that he reports a minimum of three hundred dollars ($300) in remuneration each quarter.

(e) For the purposes of this Chapter, a self-employed individual shall include an officer in a corporation or partner in a partnership or limited ownership corporation that is registered in Palau but does not have employees in Palau.”

Section 3. Amendment. 41 PNC § 751 is hereby amended to read as follows:

Ҥ 751. Basic Benefit Formula.

(a) The “Basic Benefit” monthly payment of one-twelfth (1/12) of the total of:

(1) twenty-seven percent (27%) of the first eleven thousand dollars ($11,000) of cumulative covered earnings; and

(2) two and nine tenths percent (2.90%) of cumulative covered earnings in excess of eleven thousand dollars ($11,000) but not in excess of the next thirty three thousand dollars ($33,000); and

(3) one and one half percent (1.50%) of cumulative covered earnings in excess of forty four thousand dollars ($44,000); and

(4) three quarters of one percent (0.75%) of cumulative covered earnings in excess of five hundred thousand dollars ($500.000.00).

(b) . . .

(c) . . .”

Section 4. Repealer. 41 PNC § 752(b) is hereby repealed.

Ҥ 752. Types of benefits.

(a) . . .

(b) [RESERVED]

(c) . . . ”

Section 5. Amendment. 41 PNC § 753 is hereby amended to read as follows:

Ҥ 753. Old age insurance benefit.

(a) A person who is fully insured and has attained the age of sixty years by September 30, 2015, sixty-two years as of October 1, 2015, or sixty-three years as of October 1, 2020, and retired is entitled to a monthly old age insurance benefit, beginning with the month in which that person became so entitled and ending with the month preceding the month in which he dies, subject to the earnings test. A person who attains the age of sixty and retires prior to attaining the age at which that person becomes entitled to a monthly old age insurance benefit under this Section shall receive a monthly old age insurance benefit that is reduced by six percent for each year remaining before the person attains the age of entitlement.

(b) . . .

. . .”

Section 6. Amendment. 41 PNC § 755 is hereby amended to read as follows:

“§ 755. Surviving spouse’s insurance benefit.

(a) Subject to section 757, the surviving spouse of a person who has died while fully or currently insured is entitled to a monthly survivor’s insurance benefit, beginning with the month in which the surviving spouse became so entitled and ending with the month preceding the month in which the surviving spouse dies. A widow or widower who is at least sixty (60) years of age may re-marry and continue to receive the benefit provided by this section but may not receive more than one surviving spouse’s insurance benefit.

(b) The monthly amount of the benefit is sixty percent (60%) of the basic benefit applicable to the deceased wage earner at the time of his or her death if the surviving spouse is under the age of sixty (60) until September 30, 2015, under the age of sixty-two as of October 1, 2015, or under the age of sixty-three years as of October 1, 2020, and is unmarried. The monthly amount of the benefit is one hundred percent (100%) if the surviving spouse is at least sixty (60) by September 30, 2015, sixty-two by October 1, 2015, or sixty-three by October 1, 2020, and unmarried.

(c) . . .

(d) A person who is under the age of sixty (60) until September 30, 2015, sixty-two until October 1, 2015, or sixty-three years as of October 1, 2020, and who is employed and earns more than three thousand dollars ($3,000) in any quarter shall have his/her surviving spouse benefit reduced by one dollar ($1) for every three dollars ($3) for wages earned in a quarter in excess of three thousand dollars ($3,000). The reduction shall be applied in the quarters immediately following the quarter in which the wages were earned.”

Section 7. Amendment. 41 PNC § 742 is hereby amended as follows:

“§ 742. Maximum remuneration. The maximum amount of remuneration received during a quarter from one employer by any one employee upon which contributions must be deducted and contributed to the Retirement Fund is three thousand dollars ($3,000); provided, however, that such maximum amount of remuneration shall be increased to four thousand dollars ($4,000) on October 1, 2007 and shall be increased to five thousand dollars ($5,000) after October 1, 2008 and shall be increased to six thousand dollars ($6,000.00) on October 1, 2015, shall be increased to eight thousand dollars ($8,000.00) on October 1, 2017. On October 1, 2020, there will no longer be a maximum amount of remuneration.”

Section 8. Amendment. 41 PNC § 761 is hereby amended to read as follows:

Ҥ 761. The earnings test.

(a) The “earnings test” means a test to determine whether the person who is receiving the benefit is retired or otherwise dependent on the Social Security benefit. The maximum amount of remuneration that a person may earn and still remain entitled to a full benefit is three thousand dollars ($3,000.00) during any quarter, except as provided in subsection (c).

(b) The person who is receiving retirement benefits shall have his or her retirement benefit reduced by one dollar ($1) for each three dollars ($3) of wages earned during a quarter in excess of three thousand dollars ($3,000). The reduction shall be applied in the quarters following the quarter in which the wages were earned.

(c) A person who became eligible to receive the surviving spouse benefit after December 31, 2013 shall have his surviving spouse benefit reduced by one dollar ($1) for every three dollars ($3) for wages earned in a quarter in excess of three thousand dollars ($3,000), unless:

(1) the surviving spouse beneficiary attains the age of sixty by September 30, 2015, sixty-two by September 30, 2020, or sixty-three on or after October 1, 2020; or

(2) the surviving spouse beneficiary was eligible for the surviving spouse benefit under section 755 prior to August 2, 2007.

The reduction shall be applied in the quarters immediately following the quarter in which the wages were earned.

(d) . . .”

Section 9. Effective date. This Act shall take effect on October 1, 2013, or upon becoming law without such approval, except as otherwise provided by law.

PASSED: August 19, 2013

Approved this 20th day of August , 2013.

_______________/s/_________________
HE Tommy E. Remengesau, Jr.
President
Republic of Palau