The Senate Retirement Committee heard yesterday from the Governor’s Office staffer who wrote the administration bill to increase employee contributions to the Retirement Fund, Deputy Counsel to the Governor, Alema Leota.
Leota testified that he was the technician who drafted the bill based on information given him by the subject matter experts which in this case was his boss the governor, and the Executive Director of the Retirement Fund.
The committee had heard last week from the Executive Director Iaulualo Talia Faafetai and Chairman of the Board Vaanatiu Iafeta Tofala that while they supported an increase, they had no input in the distribution as proposed in the bill
As submitted, the bill proposes three incremental increases in the employee contribution rate over the next three years. At present. the employee pays 3% of their salary while the government pays 11% into the fund.
According to the bill on January 1, 2020 the employee would be paying 4.5 % which increases to 6% in 2021 and the third one on January 1, 2022 would have employees paying 7.5% of their salaries to the pension fund.
Yesterday the author of the bill, said he had discussed the contents of the bill with the Executive Director Iaulualo Talia Faafetai in January.
Here’s part of the questioning by the Chairman of the Senate Retirement Committee Senator Tuaolo Fruean, himself a member of the Retirement Fund Board of Trustees.
Play AudioAlema
For his part, Iaulualo said that at the January meeting he had told the attorney that the Board of Trustees needs to review and approve the proposed changes. But this did not happen before the bill was submitted to the Fono.
He also gave this explanation.
Play Audioiaulualo
The Committee Chairman said with four days left in the current session the bill will not be rushed but it should be scrutinized with a view towards getting it ready for the next session in July.
Of concern to several senators was that the increase in the contribution rate of employers would eat into the earnings of employees, especially low income earners.
Senator Tuiagamoa Tavai pressed the author of the bill if he didn’t consider the burden on employees.
Leota said he did consider “the other side” but pointed out that he is not a policy maker, he as just the technician who crafted the bill.
He also said that he gave his opinion to the governor which he cannot disclose because it’s protected under attorney client privilege.
Other parts of the bill which concerned senators was the $85,000 salary cap, which the bill sets as the highest salary amount on which a members contributions will be set. So for members earning salaries higher than that their contributions and benefits will be set at the $85,000 mark.
Senators also raised questions about the provision to earmark a portion of ASTCA’s profits for the Retirement Fund .
Tuaolo asked Leota if this wasn’t a conflict of interest since he was a member of the ASTCA Board. The attorney said that he drafted the bill before he was appointed to the
ASTCA Board and he didn’t see any conflict.
