ASG terminates payroll deductions to private sector
Effective Feb. 28, 2013, the Treasury Department will be terminating payroll deduction services for private lenders and local vendors who conduct business with government employees, according to Treasurer Falema’o Pili.
In a letter dated February 12, 2013 Falema’o wrote that the letter was to provide the businesses with an advance notice that it’s their responsibility and not the government's to inform their customers of this change in ASG Treasury policy.
Samoa News understands this came after a thorough review of the payroll deduction service pertaining to local businesses by Treasury, which concluded it was not cost effective for the government.
Under the current policy, ASG payroll deductions are initiated by employees, who would provide Treasury the name of their creditors or vendors as well as the amount of money to be deducted every pay period. ASG would then submit that payment, on behalf of the employee, to the creditor or vendor, such as banks, finance companies, insurance companies, telecommunications and utility providers.
It’s unclear if this action will also include the ASG payroll deductions to the Red Cross, where a majority of government employees deduct a small portion of their check.
REACTION FROM THE PRIVATE SECTOR
One business woman said during their meeting with the Treasurer, they were told that Treasury needs to focus on government payroll, given that there are too many government employees.
A local businessman who has been in the insurance industry for some three decades told Samoa News that he is very disappointed with ASG's plan to terminate their payroll deduction service. He said this a very important service that has been in place for many years to make it easy for ASG workers to pay their bills.
The businessman, who contacted Samoa News last Friday morning, says that of his company’s 8,000 clients, the majority of them are ASG employees and many of those clients have had payroll deductions for as long as 17 years.
He said he only learned of the termination of the payroll deduction policy, which becomes effective Feb. 28th, when he was at ASG to pick up payment for clients whose insurance premiums are paid through payroll deductions.
“What happened to the Lolo administration campaign theme: “People first!’ Shouldn’t people — the ASG employees — come first instead of any other issues dealing with the government?” the businessman asked. “Even when the new administration took the helm of government, it was People First, but I guess that is no longer the case.”
He said ASG employees depend on payroll deductions to pay their monthly premiums and there are several reasons for this. Some don’t have time to get to the office to pay during working hours, or live further away from the town area and the payroll deduction is a convenient way to pay.
The businessman said that according to the letter from the Treasury Department, the vendors are responsible for letting their clients know that there will no longer be payroll deductions at the end of this month.
He says some vendors even pay ASG for this service to ensure that ASG employees’ pay their bills. For his business, payroll deductions ensure that insurance premium do not lapse, causing problems for the employees who are clients.
Two ASG employees said they learned of this change in payroll deduction last Friday and were very disappointed.
“I depend on payroll deduction to make it easy to pay bills,” said one of the employees. “Payroll deduction saves time from having to leave the office to stand in line at a vendor to pay bills.”
“This is the reason why I also have direct deposit — to save time,” said the other employee. Both of these people have worked for ASG for some 15 years, and have had payroll deductions for all of those years. They declined to have their names mentioned in the story.
On the other hand, there have been calls for more than two years for the government to get out of the business of payroll deductions, after many ASG employees complained to lawmakers that ASG didn’t transmit to the banks and other vendors their payroll deductions to pay their debts.
This occurred at a time when the government was faced with financial constraints and didn’t transmit to local and off-island vendors for employees the payments, causing ASG workers to fall behind on loan payments, insurance premiums and ASPA utility bills.
Samoa News reporter Joyetter Feagaimaalii-Luamanu contributed to this story.