Retirement Board Calls Honolulu Meeting with Leaders

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It looks like government leaders will be heading to Honolulu for a meeting with the Retirement Fund Board and its consultants net month to discuss issues  regarding the unfunded liability of the government’s pension plan.

A March 28 letter from the chairman of the Retirement Fund Board, Vaanatiu Toafala Iafeta, invites Governor Lolo and the Fono leaders  to an April 25th meeting in Honolulu with the Retirement Fund Board, Executive Director and the Fund’s actuary representatives from Sage View Consulting Group and Fund investment consultant, Mr. Jim Garrels.

The letter says that the consultants will give thorough and detailed reports on the status of the Fund and its future outlook.

According to Vaanatiu, the Board of Trustees wants to move forward in addressing some changes that have been recommended in order to mitigate the unfunded liability of the Fund.

The unfunded liability was documented in the recent actuary report of the Fund by consultants Sage View and the recent audit report by Moss Adams.

The  board is requesting an increase of the current 11% combined contribution..that is 3% from the employee and 8% from the employer… to 15% or 16% as suggested by the actuary report.

The chairman explains that the stock market downturn and new accounting principles for all retirement funds under US jurisdiction have contributed to the increase in the liability of the Fund.

The chairman wrote that currently the unfunded liability stands at  47% and is expected to face a bumpy road to recovery.

This is why the Board is seeking assistance from the governor and in particular Fono leaders to address the unfunded liability.

The chairman points out that the board with the help of the Executive Director Iaulualo Talia Faafetai has developed and adopted policies   to administer the Retirement Fund.

Vaanatiu  says the board has put a freeze on the benefit Cost of Living Allowance until such time as the Fund has regained its funding status. 

And it would now like to move forward on changes that would secure and safeguard the Fund into the future.
Vaanatiu’s letter says the board understands that some of the requested measures would create a financial burden to the government but, “it would be difficult to implement any of these changes without a cost to ASG.”

The Board chairman does not say why it’s necessary to have the meeting in Hawaii.

The proposal to increase the combined contribution to the Fund will be a taxing exercise given that in the last three years, the number of career service employees has increased to more than 5,000.

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