Bill seeks to set $85K salary cap in determining retirement payments
Pago Pago, AMERICAN SAMOA — The Senate Retirement Committee has requested an actuary report, through a study on the impact on the ASG Employees’ Retirement Fund (ASGERF) on a Senate bill, which seeks to cap a member’s contribution at a maximum annual salary of $85,000 to the government pension plan.
Committee chairman, Sen. Tuaolo Manaia Fruean made the verbal request to ASGERF board chairman, Va’anatiu Tofala Iafeta and executive director, I’aulualo Talia Fa’afetai at the conclusion this week Wednesday of a hearing on the bill, sponsored by Sen. Nuanuaolefeagaiga Saoluaga Nua.
It was noted during the hearing that in accordance with provision of the Retirement Fund law, an actuary report is required for submission to the Legislature if there are proposed changes to current law.
The bill’s preamble notes that $85,000 is a reasonable amount to cap average salary calculation in determining retirement payments. “This will help a great number of retirees to ensuring more money is available for benefits,” it says.
At the start of the hearing, Tuaolo explained the gist of the bill, which caps at $85K a year the salary of a member, no matter if the member makes more than this amount at the time of retirement.
Va’anatiu told the committee that the Board had looked at this same issue and had decided against moving forward for three reasons.
The first is that there is small percentage of ASG employees making $85,000 or more annually. Secondly, the Fund will lose money; and lastly, the Board had not yet sought an actuary report on what impact such a move will have on the Fund.
I’aulualo noted that the bill is important going forward, and one of the ways to protect the Fund for current and future retirees. Furthermore, the Board had looked at this similar issue but before any decision is made, an actuary report is needed.
He said there are current provisions of the law, that need to be further reviewed, in connection with the $85,000 cap before any final decision is made. Instead of capping the $85,000 salary by law, he suggested that the cap be done as a policy, which will allow the Board to review this important issue in the future.
He reminded senators that once this amount is set by law, “that is it, there’s nothing else to do” if changes come up in the future, pertaining to employees.
Responding to a committee question, I’aulualo said the current highest payout to a Fund member is $7,000 a month based on the Fund member’s annual salary of $150,000.
Sen. Magalei Logovi’i, a former Fund board member and former ASG Treasurer, believes the Board should set the cap as a policy and not by law. Magalei, who signed on as a co-sponsor of the bill, admitted during the hearing that he signed on after being asked by Nuanuaolefeagaiga, without reading the details of the bill.
He reminded senators that this same issue was raised before, but an actuary report is needed from the Fund. At the end of the hearing, Tuaolo requested the actuary report, so the committee would know what impact such a proposal will have on the Fund.