Admin bill seeks to hike employee contributions to Retirement Fund
Pago Pago, AMERICAN SAMOA — An administration bill proposing an increase in the contribution of members of the American Samoa Government Employees' Retirement Fund (ASGERF) was submitted to the Fono last week by Acting Governor Lemanu Peleti Mauga.
In his letter to Fono leaders, Lemanu said the proposed legislation increases membership contributions and is to provide a profit allocation from the American Samoa Telecommunications Authority (ASTCA) to the Retirement Fund to improve the Fund’s financial security.
He said the ASGERF was created to attract and retain a qualified, dedicated workforce to serve the needs of the citizens of American Samoa. "The actuarial soundness of ASGERF is required to ensure that employees of the American Samoa Government (ASG) will receive their benefits earned through loyal and efficient service."
The Fund actuary has recommended an increase in contributions to the Fund. The Board of Trustees has deemed it to be in the best interest of the Fund for the members to increase their financial support of it.
$85,000 will be the maximum salary used in calculations to determine retirement payments. To support the Fund in the financing to its unfunded liabilities, 25% of profits from ASTCA shall be allocated to the Fund.
According to the bill, the increase in contributions will significantly improve the financial security of the Fund, payment from which play an important role in the economy of American Samoa.
Effective January 1st next year, the bill proposes a three phase increase by ASG employees who are members of the Fund, but no increase in the government’s contribution.
According to the bill, the first increase effective January 01, 2020 will be 4.5% of the employee’s salary, then it increases to 6% January 1, 2021 and the final increase will be 7.5% effective January 1, 2022. At present, employees pay 3% and the government pays 11%.
It also allocates any profits made by ASTCA as follows; 50% to pay for ASTCA’s 2018 bond debt pursuant to its repayment agreement with the American Samoa Economic Development Authority (ASEDA), and upon full payment of this agreement, these funds shall be used to pay any other debts ASTCA owes to ASG or any of its departments or agencies; 25% to the ASGERF to fund its unfunded liabilities; and 25% for capital expenditures and emergency purchases.
Records from the ASGERF which were presented to the Fono show that the Fund paid out $25.3 million in benefits and refunds, but it only raked in $10.8 million from contributions; $7.8 million from ASG and $3.027 million from members. That was a $14.5 million shortfall between contributions and payouts, and the difference was paid from the Fund’s investment earnings.
During the February meeting of the Retirement Fund Board and lawmakers in Honolulu, a recommendation was made, that the contribution rate be increased from 11% to 16% with no increase in the Cost of Living Adjustment (COLA).
The bill is transferred to the House Budget Committee chaired by Rep. Vailiuama Steve Leasiolagi, and a hearing is scheduled for Thursday at 8:30a.m.