Senate bill seeks hike in contributions to reduce ASGERF’s “unfunded liability”
Pago Pago, AMERICAN SAMOA — The Senate Retirement Committee, chaired by Sen. Soliai Tuipine Fuimaono, has scheduled for Thursday this week, a hearing on a bill sponsored by Sen. Magalei Logovi’i and introduced in the Senate yesterday that seeks to increase members’ contribution to the American Samoa Employees’ Retirement Fund (ASGERF).
Requested to testify during the hearing is the ASGERF board of trustee chair and executive director for the Retirement Fund Office. As required by law, the committee has also directed ASGERF to provide an actuary report on the impact of the Fund on the purposed increases.
Some senators plan to seek an update and status of the Fund during the hearing.
According to the bill’s preamble, the ASGERF contributions “have not seen an increase for years, despite reports from ASGERF leaders who report we must increase total contribution rate from 11% to 16% if we are to keep” the Fund viable in the long term.
Furthermore records from ASGERF were presented to the Legislature to show that the Fund paid out $25.3 million in benefits and refunds but it only brought in $10.8 million from contributions — $7.8 million from ASG and $3.02 million from members — creating a shortfall of $14.5 million between contributions and payouts that was paid from the Fund’s investment earnings.
Therefore, it “is imperative for us to increase the contributions from both the government and from the members if we are to keep our Fund solvent for our future generations.”
The current 11% contribution to the Fund — as dictated by law — breaks down to 8% from the employer and 3% by the employee. But this rate has been described by some lawmakers in the past as inadequate because there is more money going out than money coming in. Lawmakers last year also voiced concerns over the increase in the “unfunded liability”.
The new Senate bill seeks a “3% increase” to be added to the government’s contribution rate while the members contribution hikes from 3% to “5%”.
Senate President Tuaolo Manaia Fruean during the official opening of the 37th Legislature on Jan. 11th called on the Lemanu Administration to look at increasing the contribution rate to the ASG Retirement Fund, saying that more is being paid out from the fund than the incoming monthly contribution.
Tuaolo, who is also a member of the ASGERF, board of trustees said the current 11% total contribution rate brings in about $800,000 a month while payout totals $2 million. He pointed out that revenue the Fund collects from its investments covers the rest of the money needed for payouts.