Gov kills bill approving rate hike for Retirement Fund contributions

Pago Pago, AMERICAN SAMOA — Gov. Lemanu Peleti Mauga has returned to lawmakers a Fono approved bill — originating from the Senate — that hikes the contribution rate of employers and employees to the ASG Employees Retirement Fund — without his signature or approval of the measure, which was to help reduce the Fund’s deficit.

In a Nov. 8th letter to Fono leaders, the governor wrote that, in accordance with the territory’s revised Constitution, “I am not signing this bill within 30 days of the Legislature’s adjournment; therefore, it shall not become law.”

The bill — which sought to increase the contribution by adding a “3% increase” to ASG’s contribution from the current 8% while the members’ contribution would go up from 3% to “5%” — was approved in mid September before the close on Sept. 17th of the 2nd Regular Session of the 37th Legislature.

Lemanu informed the Fono leaders of issues that “remain my top concern” with the legislation, which includes that the “bill does not identify a funding source for the increase in government contribution.”

He said the increases for government and employee contributions are “too high” and he recommends a “1% increase for both government and members. Furthermore, I also recommend that the increase in contributions be prorated for a period of 3 years.”

In conclusion, the governor informed Senate President Tuaolo Manaia Fruean and House Speaker Savali Talavou Ale that: “It is my intention to propose an alternative bill and work with you and your esteemed colleagues to create legislation that is in the best interest of our people.”

The governor had raised the same concerns when he vetoed in April this year an identical bill approved by the Fono during the First Regular Session, that also sought to raise the contribution rate for employer and employee.

The governor’s concerns included no funding source identified to increase the government contribution and that the raises in government and employee contributions were “too high”. The governor recommended at the time, a 1% increase for the Government contribution and a 1% increase for the Members’ contribution.

Records from the Fund presented to the Fono show that ASGERF paid out $25.3 million in benefits and refunds but it only brought in $10.8 million from contributions — resulting in a $14.5 million shortfall between contributions and payouts. The Fund’s investment earnings covered the shortfall.

And this has been the reason for the Senate in twice moving — through approved bills — to increase the contribution rate.