Senate rejects proposed bill to raise local investment for Retirement Fund
Pago Pago, AMERICAN SAMOA — In a vote of 8-yes and 6-nays, the Senate yesterday disapproved its version of the Administration bill seeking to raise local investment by ASG Employees' Retirement Fund from from 17% to 35% .
Fono senior staffers said the Senate needed at least 10-yes votes for approval of the measure, which would also create a new section of the Retirement Fund statute, titled: “Investment in American Samoa Hawaiki System”.
Senators who cast the “no” votes are Magalei Logovi’i, Fa’amausili Mau Mau Jr., Muagututia M. Tauoa, Fonoti Tafa’ifa Aufata, Satele Galu Satele Sr., and Sauitufuga Pita Suiaunoa.
The “yes”votes, were Sens. Misaalefua Hudson, Taua’a S. Vaouli, Tilo Vasaga, Tuaolo Manaia Fruean, Alo Fa’auuga, Levu Solaita, Tuiagamoa Tavai, and Fai’ivae Iuli Godinet.
The proposed law is yet to be introduced in the House, according to two faipule, and it’s unclear when the measure will be presented in the House for first reading, as lawmakers have been busy over the past two and a half weeks with fiscal year 2019 budget hearings, which are expected to be completed early next week.
During a Senate Retirement Committee hearing on the bill early this week, Attorney General Talauega Eleasalo Ale echoed what the governor told the Fono last month in submitting the proposed law. That is, ever since the Retirement Fund invested locally in government projects over the years, there was never a time that the Fund lost money and all these investments were successful.
Raised during the hearing, is whether an increase in the cost of living allowance (COLA) for retirees would be implemented in the near future, to which Retirement Fund Office executive director Iaulualo Talia Fa’afetai responded that the ASGERF board of trustees continues to look into to increasing the COLA.
Another issue that came up during the hearing is the monthly contribution by both employers and employees to the Fund, and that's around $800,000 while the payout is about $2 million.
Sen. Tuaolo, who is also the Retirement board vice chairman, noted that investment proceeds are covering the balance of the $2 million payout. Last year, he said, $24 million in investment proceeds was used to cover the payout.
Tuaolo is also chairman of the Senate Retirement Committee and he chaired the hearing.
Sen. Sauitufuga Pita Suiaunoa inquired about whether there is a “conflict of interest” in Tuaolo chairing the hearing when he is also the vice chair of the ASGERF board of trustees. Tuaolo asked his colleague to cite an example of conflict of interest — Sauitufuga moved on to other questions and concerns regarding the proposed law.
Sen. Fai’ivae, who is also the ASTCA board chairman, said he doesn’t believe there is a lot of risk in the Fund investing locally, adding that he is thankful there is this chance to invest in American Samoa.
But there were still concerns voiced by some senators over the importance of protecting the Fund for future generations. Others however, argued that this is a local investment to help boost the territory's economy.
It was also noted that the Retirement Fund is not a loan institution and should be protected at all costs, to ensure its stability for current and future retirees.
During a hearing of the Senate Retirement Committee on Tuesday, this week, when the bill was passed in second reading, Sen. Magalei raised the question with Attorney General Talauega Eleasalo Ale, who appeared alongside Retirement Fund Office executive director, Iaulualo Talia Fa’afetai as a witness, whether raising the local investment percentage is legal.
He argued that Public Law 30-14 raised the 10% of local investment to 17% during the time of the Togiola Administration, which requested a $20 million loan. He said a provision of the law sets a sunset clause that after the $20 million is paid off, the percentage returns to 10. (See yesterday’s Samoa News online edition for details).
Also during Tuesday’s hearing, Iaulualo informed committee members that as of last week, the Retirement Fund is worth $210 million.