ASG Employees’ Retirement Fund shows positive growth in FY23 Audit

Pago Pago, AMERICAN SAMOA — The American Samoa Government Employees’ Retirement Fund (ASGERF) has released its audited financial statements for the fiscal year 2023, providing a comprehensive overview of its financial position and performance.

The audit, conducted by Moss Adams, offers insights into ASGERF’s management of pension assets and liabilities, revealing notable changes and trends.

According to Moss Adams, the financial statements for FY2023 present fairly, in all material respects, the financial position of ASGERF as of September 30, 2023, and the changes in financial position for the fiscal year then ended, in accordance with accounting principles generally accepted in the United States of America.

One of the key highlights from the audit is the increase in ASGERF’s total net position by $14,546,547, or 9.2%, between 2023 and 2022. This growth is attributed to favorable market conditions and an increase in the contribution rate, leading to a net appreciation in the fair value of the Fund’s investments totaling $20,761,698.

However, despite this positive growth, ASGERF's net position decreased by $37,349,096 in 2022, with the net position totaling $172,688,865 as of 2023. This marks a 15% decrease from its peak net position of $202,366,779 in 2018, accumulating an overall decrease of $22,157,658 since then.

The Fund’s funded status, which represents its fiduciary net position as a percentage of the total pension liability, increased to an estimated 49.43% as of September 30, 2023, compared to 48.24% in the previous year.

This improvement is primarily attributed to new legislation mandating higher contribution rates for both employers and members, with the employer now contributing 10% and members contributing 4%. Previously, the employer contributed 8% and employees 3%.

In terms of contributions, employer contributions for 2023 amounted to $14,282,478, an increase from $11,290,906 in 2022, while member contributions rose to $5,901,088 from $4,460,237 in the same period. Total contributions for 2023 reached $20,183,566, compared to $15,751,143 in 2022.

Benefit payments, refunded contributions, and expenses increased by $1,362,263 from $27,236,032 to $28,598,295 over the prior year. In 2023, benefit payments exceeded contributions by $8,414,729, whereas this deficit was $11,454,889 in the previous year.

The assets needed to finance retirement benefits are accumulated through the collection of contributions and earnings on investments. For FY2023, the Fund experienced total additions to the fiduciary net position of $43,144,842 due to net appreciation in the fair value of investments.

The Fund’s weighted average return on investments for the year ended September 30, 2023, was 14.60%, with most of its portfolio invested in domestic equities and cash equivalents. This represents a significant improvement compared to the -14.58% return in 2022. As of September 30, 2023, the Fund’s asset allocation included 66% in domestic equities, 8% in international equities, 2% in cash equivalents, 17% in fixed income securities, 4% in alternative investments, and 3% in real estate.

Other notable investments include the Centennial Office Building, Hawaiki Cable Income, and a loan to ASTCA. The Centennial Office Building is recorded at an estimated fair market value of $4,000,000. The loan to ASTCA, valued at fair value, amounted to $11,436,102 as of September 30, 2023.

During 2019, Senate Bill 36-15, was approved as Public Law No. 36-7, regarding the division of Hawaiki revenue. Hawaiki is a cable branch operated by ASTCA. The bill outlines the payments to be remitted by ASTCA to the Fund. According to the bill, the Fund receives 25% of direct wholesale bandwidth sales revenue to third parties, plus interest. During the years ended September 30, 2023 and 2022, the Fund recognized Hawaiki cable income totaling $52,968 and $146,025, respectively.

It should be noted however that general and administrative expenses increased slightly from $1,883,846 in FY2022 to $1,904,036 in FY2023. Additionally, the number of ASG employees covered by the retirement fund decreased to 4,763 in 2023 from 5,155 the prior year, while the total number of beneficiaries increased to 1,998 from 1,994.

BACKGROUND

Senate President Tuaolo Manaia Fruean, who is the current chairman of the retirement trustee board, during his confirmation hearing in the House of Representatives this year to remain on the board, told committee members that the Fund was doing well although there were times he had trouble sleeping due to monitoring markets where the funds are invested.

Samoa News should point out that Tuaolo’s remarks seem to be the only public mention of the results of the biannual meeting of the Fund that the Fono attended in 2023.

Tuaolo was confirmed to the Trustee Board and will serve until 2029.

Of note, the resignation of Retirement Fund Office executive director, Vaitautolu I’aulualo Fa’afetai Talia was publicly announced this month (May) as he is running for Governor in the 2024 gubernatorial race. He still had one year remaining on his contract. It was not required that he resign, but chose to do so. Caroline Wendt has been appointed as Acting Director by the board of Trustees.