REQUEST FOR PROPOSAL (CONSULTING SERVICES)

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REQUEST FOR PROPOSAL

(CONSULTING SERVICES)

March 16, 2015

MARSHALL ISLANDS SOCIAL SECURITY ADMINISTRATION P.O. Box 175, Majuro, Marshall Islands MH 96960

Phone: (692) 625-3101, Fax: (692) 625-4570 Email: missa3@ntamar.net

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I.

BACKGROUND

MISSA’S financial profile

Since 2009, MISSA has experienced operational deficits due to the widening gap between its revenues and benefit payments. Contributions collected in the past five years remained flat at an average of around $12-13 million a year while the $13.6 million yearly benefits paid in 2009 have now soared to $18.4 million in 2014 and are expected to reach $19.6 million in 2015. This translates to about 7% increase every year. The average administrative expenses of MISSA is around $900 thousand a year. To ensure uninterrupted benefit payments and positive cash flow, MISSA was forced to make a series of withdrawals from its investments outside the country which have now totaled $11.5 million as of December 31, 2014. Another $6 million investment drawdowns are expected by the end of 2015. MISSA’s net assets totaled $72.0 million as of December 31, 2014 comprised mainly of offshore investments with a market value of $59.7 million and local investments worth $12 million. As per the latest actuarial report (as of October 1, 2013), if this trend will not change, the system will be totally bankrupt by 2027. MISSA’s funded actuarial accrued liability (as of October 1, 2013) was 23%.

To attain long-term financial sustainability of the system, MISSA has considered the option to convert its current system (Defined Benefits-DB) to Defined Contributions (DC) plan.

Objectives of this project

Project # 1 – Current Performance Review Actuarial review

 Provide an independent actuarial review and second opinion on the valuation report as of October 1, 2013; use new (more realistic) assumptions as needed.

Investment review

 Provide an opinion on the current asset allocation and investment policies of MISSA.

Project # 2 – Plan conversion design (from DB to DC plan)

 Establish accounts for workers from available assets in exchange for future benefits;

 Worker’s accounts would continue to grow with asset returns;

 Beneficiaries would be able to draw periodic payments from accounts based on life expectancy and expected returns; and

 Opening account balances could be established under one or several alternatives.

Project # 3 – On-going Consulting Services for Investment Portfolio Management

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II. SCOPE OF WORK

Project # 1 – Current Performance Review Actuarial review

 Provide independent assessment of the assumptions utilized for actuarial valuation;

 Actuarial analysis and valuation update;

 Collect demographic data to independently audit the actuarial valuation; and

 Compare valuation results with the valuation report of October 1, 2013.

Investment review

 Provide benchmarking data of the current asset allocation against other public pension entity of similar size;

 Provide simulation analysis to assess the probability of depletion of funds under the current asset allocation/benefit/contribution policies;

 Suggest necessary changes to the system; and

 Benchmarking plan investment return by asset class and manager, with appropriate investment management universes and benchmarks.

Project # 2 – Plan conversion design (from DB to DC plan)

 Collect all participants’ individual data for analysis;

 Evaluate financial implications of different options to be considered by MISSA;

 Provide a description of the alternatives to transition from current design (DB) to another (i.e. DC);

 Illustrate the financial impact of each alternative on worker/beneficiary segments; and

 Assess the amount workers would need to save/employers’ need to contribute in the future to attain specific retirement income at a specific retirement age. Project # 3 - On-going Consulting Services for Investment Portfolio Management

 Asset allocation and portfolio restructuring recommendations, if applicable;

 Investment option tiering design, if applicable;

 Vendor searches and recommendations; and

 On-going management and monitoring, if necessary.

III. PROGRAM MANAGEMENT

Direction

Informal progress meetings (by telephone) may be held with the contractor as deemed necessary by MISSA.

Timeline

Work on this project should commence not later than May 4, 2015 and have this work completed no later than September 30, 2015.

IV. PROPOSAL PROCESS

Questions of a technical or procedural nature should be directed by telephone or email to:

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Saane K. Aho

Administrator & CEO

Marshall Islands Social Security Administration P.O. Box 175, Majuro MH 96960

Republic of the Marshall Islands

Phone: (692)625-3101; Mobile: (692)455-1975 Email: missa3@ntamar.net

If by email, cc to: Avelino Gimao Jr.

Deputy Administrator & CFO

Email: missacfo@ntamar.net and cc: avegimao@hotmail.com

Envelopes containing the original copy and two (2) photocopies of the proposal must be sealed and clearly marked in large letters “PROPOSAL FOR CONSULTING SERVICES”. All proposals must be received prior to April 24, 2015 at 5:00pm, Marshall Islands time, by:

Saane K. Aho

Administrator & CEO

V. PROPOSAL EVALUATION CRITERIA

MISSA will evaluate proposals and select a contractor based on a combination of the following factors:

 Qualifications and relevant experience of the firm’s proposed project management team and staff;

 The firm’s track record of successful completion of assignment similar to this project;

 Quality of references from similar work completed recently;

 Understanding of the issues facing MISSA;

 The extent to which the proposed solutions matches the needs of MISSA;

 Quality of the proposed plan for testing and acceptance of the implemented structure;

 Quality of the contractor’s approach to knowledge transfer; and

 Reasonableness of cost of services requested.

VI. REQUIREMENTS AND FORMAT OF THE PROPOSAL

Contractors responding to this RFP shall submit their proposals, organized and presented below.

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Accuracy and completeness are essential. Since the successful proposal will be incorporated into the contract, contractors are cautioned not to make claims or statements to which they are not prepared to commit contractually.

Part 1 – Letter of transmittal

Part 1 of the proposal must contain a letter of transmittal by email or personal delivery. It shall:

 Concisely identify the services offered in the proposal; and

 Include the name, title, address, telephone number and email address of the contact person, and one or more individuals authorized to sign a contract; Part 2 - Understanding the scope of work

In this section, the Contractor shall provide a concise presentation of its understanding of the major issues facing MISSA and of the elements required in implementing the scope of work described above.

Part 3 – Proposed work plan and schedule

In this section, the Contractor will describe the approach and tasks to be undertaken in order to successfully complete the requested work. Issues raised on Section VI, Part 2, shall be addressed.

Part 4 – Relevant experience and client references

In this section, a brief description of relevant work experience is to be provided, detailing the timeframe over which services where provided to specific clients. Information of relevance to the Scope of Work should be presented to allow MISSA to assess Contractor’s experience.

VII. LIMITATIONS

MISSA reserves the unqualified right to waive defects in any proposal, to choose or accept or reject any or all proposals submitted in response to this RFP for any reason whatsoever without explanation or justification, to select any firm as the party with whom it would be willing to enter into an agreement regardless of whether such party shall have submitted a proposal pursuant to this RFP at any time including the deletion, addition, modification or other changes thereto, and to make any decision in any manner as MISSA may choose in its sole discretion in the determination of its own interests and irrespective of the position of any interested party that in MISSA’s determination is unreasonable, unfair, arbitrary, discriminatory or capricious.

MISSA makes no representations, warranties or guarantees that the information contained herein is accurate, complete or timely. The furnishing of such information by MISSA shall not create, nor be deemed to create any obligation or liability upon it for any reason whatsoever, and each organization by expressing its interest and submitting its proposal expressly agrees that it has not relied upon foregoing information and that it shall not hold MISSA liable or responsible therefore in any manner whatsoever.

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VIII. PUBLIC RECORDS REQUIREMENTS

MISSA shall seek to hold all proposals and subsequent submissions in confidence, to the extent consistent with applicable laws of the Republic of the Marshall Islands, until a final decision has been made or the selection processes are terminated.