Two Retirement Fund bills coming up against Friday’s Fono recess

Pago Pago, AMERICAN SAMOA — The Senate approved on Wednesday legislation to amend the “investments of reserves exceeding current requirements” to allow the ASG Employees Retirement Fund (ASGERF) to invest locally without unnecessary restrictions.

Senate President Tuaolo Manaia Fruean, who sponsored the legislation and a member of the ASGERF Board of Trustees, explained briefly — after the bill was introduced last week Thursday — that current law caps local investment of the Fund at up to 17% and the proposed law removes this provision and gives the ASGERF board the authority to decide how much to invest in American Samoa.

The bill’s preamble states that the Fund pays out yearly benefits and refunds amounting to about $25.3 million, while contributions amount to $7.8 million from ASG and $3.02million from its members. And this totals to a $14.5 million shortfall between contributions and payouts paid from the Fund’s investment earnings.

It also says that it’s imperative to raise the contribution rate because if “we do not raise the contribution levels to cover the unfunded liability, the ASGERF fund will run out of money.”

And “in an effort to alleviate some of the unfunded liability, ASGERF needs more flexibility to invest monies in our own local infrastructure,” it says and explained that deleting current provision of the law (ASCA 7.1444(g) — which deals with capping the local investment percentage — “will allow ASGERF the freedom to invest monies locally, without unnecessary restrictions.”

The preamble declares that, “it is time for American Samoa to start taking control of growing our own economy. Investing in our own infrastructure is not just the smart and responsible thing to do, but it is a necessity if we are to grow.”

The bill now goes to the House for review and consideration. However, the current 3rd Regular Session of the 37th Legislature officially ends at the close of business tomorrow, Apr. 1, with the Fono not returning until July for the 4th Regular Session.

ASGERF CONTRIBUTION RATE

In other ASGERF issues, both the Senate and House have approved in final reading their respective versions of an Administration bill, which seeks to increases the contribution rate by both ASG and employees to the Fund. Both chambers are now going through the process of approving each other’s versions before sending one to the governor for his review and signature.

Gov. Lemanu Peleti Mauga, had twice last year rejected Fono approved bills — which originated from the Senate — to increase the contribution rate, saying that his top concern is that the bills do not identify a funding source for the increase in the government contribution.

He said the increases for government and employee contributions are “too high” as proposed by the Fono bill and he recommended that the increase in contributions be prorated for a period of 3 years.

The Administration’s bill increases the total contribution rate for both ASG and employee from the current 11% to a total of 20.37% in order to reduce the shortfall, which is reported by ASGERF at $9.4 million for Fund-year 2019, according to the preamble.

The ASG contribution increase starts at 10% from Oct. 1, 2022 through Sept. 30, 2023; 12% from Oct. 1, 2023 to Sept. 30, 2024; and 14% after Sept. 30, 2024. The bill states that funds for ASG’s contribution shall be provided for in the annual appropriations of ASG’s budget for the fiscal year in which the contributions are due.

For employee contribution: 4% from Oct. 1, 2022 thru Sept. 30, 2023; 5% from Oct. 1, 2023 through Sept. 30, 2024; and 6% after Sept. 30, 2024, according to a summary of the bill, which also states the legislation becomes effective Oct. 1 this year upon passage by the Fono and approval of the governor.

ASG officials told Samoa News last week that the governor gave serous consideration that the bill ensures that there’s “no serious financial impact” of the proposed hikes for the government workforce, who are members of the Fund.

BOARD MEMBER

And last week both the Senate and House approved the governor’s nomination of former Commerce Department director Fuiavailili Keniseli Lafaele to the Fund’s board of trustees for a term of five years.

The governor had initially appointed in January this year, Lisa Peau to the board but she had been off island and has not returned to the territory, according to Lemanu’s letter to Fono leaders last month.