Contract workers not eligible for Retirement Fund without prior membership

Pago Pago, AMERICAN SAMOA — Contract workers are not eligible to be members of the American Samoa Government Employees Retirement Fund. However, for long time career service employees who are appointed to cabinet positions or other political appointments, their memberships are not terminated.

This was the explanation from the Director of the Retirement Fund I’aulualo Faafetai during a House Retirement Committee hearing last week when asked about reports that contract workers are now members of the Fund.

I’aulualo said it’s not right that they are deprived of benefits when they have been paying into the Fund for years.

The House committee heard testimony from Treasurer Malemo Tausaga, Retirement Board Chairman Vaanatiu Iafeta Tofala and I’aulualo when the Senate bill to raise the employer/ employee contributions was being reviewed.

It was Rep. Faimealelei Anthony Allen, who pressed those testifying about reports that contract workers are now members of the Fund despite the law stating that only ASG employees can be members.

Faimealelei also wanted to know if there is a possibility that private sector employees could be eligible to be members of the fund. The Aua faipule pointed out that the reason he asked this question was that over 2,500 employees were employed by the cannery and that’s a lot of people in reference to contributions.

In response to Faimealelei’s suggestion, I’aulualo pointed out that the statute is clear that the Fund is only for ASG employees.

With regards to ASG contract workers, I’aulualo said that they are in compliance with the statute that contract workers are not eligible to be members of the Fund, however, the Retirement Board is still reviewing the law and seeing if there’s a way to amend the law to allow contract workers to be eligible as members of the Fund.

Such an amendment would then be passed over to the Legislature at a later time to review and (possibly) pass.

Faimealelei agreed with I’aulua’o recommendation. He said that there are many people working under contract with the government after being appointed to take over leadership posts and they had been contributing to the Fund for many year as career service employees.

(Samoa News notes that I’aulua’o did not speak of a possible amendment to allow private sector to participate in the Fund, and Faipule Faimealelei did not bring it up either.)

Currently, the Retirement Fund pays out more than $2 million per month in retirement annuities but collects just over $800,000 from contributions. According to I’aulualo they use $1.2 million from the fund’s investment accounts to cover the difference.

Of the ASG Fiscal Year 2020 payroll of $74,636,000, Treasurer Malemo Tausaga said the ASG contribution to the Retirement Fund was $5.9 million. Member contributions were $2.2 million.

For the proposed increase, he estimated that ASG would pay $8.2 million while members would pay $3.2 million. These numbers cover just the roughly 4000 ASG employees and do not include the employees of authorities like LBJ Hospital, ASPA, ASTCA and ASCC.

When asked by Faipule Larry Sanitoa how ASG would meet the higher contribution rate without a revenue source in the bill, the Treasurer said they would have to be aggressive with revenue collections. He said ASG has accounts receivable of more than $20 million. He said, “We need to collect money from companies and individuals with debts to ASG to help with this.”

Sanitoa noted that the Retirement Board of Directors should take some responsibility for inaction on addressing the deficit or unfunded liability. Had the board acted earlier to raise the contribution, he said, the impact wouldn’t be so great.

In response to questions about investment returns, I’aulualo said it’s no secret that 2020 was a very bad year not just for the U.S. market but around the world as well. He said the Fund dropped to $150 million but has rebounded. He told the hearing the value of the Fund is now back up to $200 million.

I’aulualo also explained that about $2 million is paid out by the Retirement Fund to its beneficiaries every month while only $800,000 is received every month for distributions. He explained that the Retirement Fund takes out from their account in the market $1.2 million to off set the payroll every month.