The social security in Micronesia is regulated by a law of 1982 implemented in 1983, which provides for a social insurance system.
The system covers all gainfully employed persons, including certain self-employed persons. Casual employees who work less than 1 week in any calendar month, certain self-employed persons, and family labor employees are excluded from the system. Special systems (individual retirement plans) are available for some government employees.
Funds are contributed by the insured person and the employer in the following proportions: (i) Insured person: 7% of earnings; and (ii) Employer: 7% of twice the salary of the highest-paid employee per quarter. In case of self-employed persons, the contribution is 5% of business annual gross revenue for the previous calendar year. The minimum earnings used to calculate contributions are USD 300 a quarter. The maximum earnings used to calculate contributions are USD 6,000 a quarter.
The old-age pension is available at age 60, with 1 quarter of coverage for each year after June 1968 (or since age 21, if later) up to age 60 and a total of at least 50 quarters and US$2,500 in contributions. As of 2011, the full old-agepension is paid at age 65. A reduced pension is paid to persons aged 60 to 64 who meet the qualifying conditions for an old-agepension. They may continue to work. The old-agepension is reduced by USD 1 for each USD 2 of earnings exceeding USD 300 a quarter, if the pensioner is reemployed. The pension is payable abroad to citizens of Palau, the Marshall Islands, and the United States, under reciprocal agreement. For citizens of other nations who are fully insured and older than age 60, a lump sum of the total value of contributions is paid over a six-month period.
An old-age lump-sum benefit is paid to insured citizens of Micronesia who do not qualify for the old-agepension at retirement age. The lump-sumbenefit is payable abroad to citizens of Palau, the Marshall Islands, and the United States under reciprocal agreement.
The old-age monthly pension is 16.5% of the first USD 10,000 of cumulative covered earnings plus 3% of the next USD 30,000 plus 2% of the next USD 262,500 plus 1% of cumulative earnings exceeding USD 302,500. The minimum monthly old-agepension is USD 75.
In case of early pension, 50% of the old-agepension is paid.
The old-age lump-sum benefit is 4% of the insured's cumulative covered earnings.
The system is administered by the Federated States of Micronesia Social Security Administration.
Source:Social Security Programs Throughout the World: Asia and the Pacific, 2010, available at http://www.ssa.gov/policy/docs/progdesc/ssptw/2010-2011/asia/index.html