The gubernatorial team of Faoa Aitofele Sunia and Larry Sanitoa has circulated a letter in response to comments by the Executive Director of the Retirement Fund, Iaulualo Talia Faafetai before the Fono giving a positive picture of the Fund.
The candidates say they don’t want to make a political issue of this, but “it is important that we point out our concerns and give our promise not to abuse the fund.”
Iaulualo told the Senate “the ASG Employees Retirement Fund is doing well and its most current portfolio is valued at $185 million-plus”.
The Faoa and Sanitoa team says the statement is probably true.
However, they said it is important to note that the amount of money in the Fund is only relevant to the condition of the Fund when properly compared to fund income and future obligations.
The statement says a recent report by Retirement Fund consultants showed considerable concern for the state of the fund and recommended increasing contributions by ASG employees. The report indicated that, without increased income, the fund is at serious risk of failure.
The challengers for the Lolo and Lemanu administration say loaning money to ASG increases risk to the Fund, given ASG’s history of poor fiscal management and non-payment of obligations.
They state there are many better places for the Fund to invest than in a small government like ASG.
$11 million of Retirement Fund money was used to repay the balance of two ASG loans with the Retirement Fund and the amount spent on the repayment of the loans was used to purchase American Samoa Economic Development Authority bonds.
The repayment term is 12 years and would net a return of $9 million for the Retirement Fund.
The text of the Faoa Sanitoa team letter follows:
“Over 40 years ago, the American Samoa Government Employees’ Retirement Fund (ASGERF) was created to help supplement the income of elderly workers whose Social Security was not enough when they ended their service with the government.
“Since then, employee contributions to the Retirement Fund have helped it grow from $300,000 to nearly $200 million under the management of five trustees.
“After more than 30 years of careful management, by the Board, the Retirement Fund is ranked as one of the top pension plans in the nation.
“We were able to earn this ranking by having a limited number of Board members who did not yield to the pressures of politics.
“They carefully scrutinized both investments and credit facilities to ASG and held their fiduciary duties paramount.
“Unfortunately, what was meant to be a source of security for Retirement Fund members, has become ASG’s source for quick loans and refinancing of government debt.
“After many years of blood, sweat, and tears, to make the Retirement Fund strong and safe, the fund may now be in jeopardy, as Retirement Fund consultants estimate our fund will run out of money in 30 years.
“The practice of borrowing from the Retirement Fund needs to stop and the make-up of its Board needs to be free of politics.
“Administrations come and go. The current administration – or future current administrations – can borrow with little regard for repayment because future administrations will inherit the liability and have to deal with repayment. We must ensure the survival of our Retirement Fund by proposing well developed long-term plans formulated to avoid catastrophes like that seen in Puerto Rico and other states whose pension programs have gone bankrupt.
“We need to protect the future of our Retirement Fund for current and future beneficiaries. We must stop the politics and practice of ASG borrowing from the Fund, which threatens its survival.
“We are committed to:
- Suspend all borrowing from the Retirement Fund by ASG.
- Retirement Fund members to form an association and change the law to allow association representation on the Retirement Board.
- Require the Board to hold an annual meeting/conference with Retirement Fund members providing reports on the health of the Fund.
- Require from the Retirement Office cost reduction measures to curb spending.
- Change the law to return the number of Board members back to 5, rather than its current 7, and ensure compliance with Retirement Fund rules on conflicts-of-interest.