The Director of the American Samoa Government Employees Retirement Fund, Vaitautolu Iaulualo Faafetai Talia, supports a bill to remove the current limit on Retirement Fund monies that can be invested locally. Current law caps local investments at 17%.
A bill introduced by Senate President and Chairman of the Retirement Fund Board of Trustees, Tuaolo Manaia Fruean would remove that limit and gives the Board of Trustees the freedom to decide all investments local and off island.
Vaitautolu said at a hearing of the Senate Retirement Committee on the bill, yesterday, that their office and the Board of Trustees fully support the bill. He said 90% of Fund monies is invested off island, and there’s no limit on how much is invested anywhere in the world including Canada or Russia.
He told senators that all local investments by the Fund did not run into any problems.
All local loans from the Fund have all been paid except for a loan by ASTCA, which he said is being paid on time.
The director said he doesn’t know for sure why the cap on local investments was put in place but suspected it was to limit the amount of loans that the local government could make from the Fund. He added this cap was made at a time when the government was at its infancy stage.
At present, the Fund’s value is about $170 million—down from $200 million—as a result of the decline in the world market, due to COVID.
Senator Uti Petelo pointed to the recent increase in contributions by members and the government and asked if it wasn’t time to raise payments for retirees. Vaitautolu agreed that it was time to give retirees a Cost of Living Adjustment, or COLA, raise.
Senators Alo Stevenson, Utu Sila Poasa, Satele Lili’o and Tuiasina Laumoli had reservations about the bill, particularly that the board would have unlimited power to invest Retirement Fund monies. They suggested increasing the cap and monitor what happens over the next few years instead of removing the limit on local investments altogether. Utu suggested a cap of 50% instead.
Senators who spoke in support of the bill were Committee Chairman Soliai Tuipine, Togiola Tulafono, Ponemafua Taleni, Malaepuke Moliga and Tuiagamoa tavai.
Togiola said the bill was an important one, and would reap benefits for the people and territory. He said local investments by the Retirement Fund do not come with a fee for the investor advisors like the investments off island for which a fee is paid to the advisor. “The advisor doesn’t do much work except submit a two page letter advising why the Retirement Fund should invest,” he said.
Togiola said all of the board members are locals and he firmly believed all of them have, at heart, a desire to protect the Fund and make it grow for the members.
The committee voted to report the bill for passage during yesterday’s Senate session and was on the calendar.
Senator Utu moved to amend the bill and cap local investments at 50% instead of the original wording, which is to remove the cap altogether.
However, Togiola argued that Utu’s amendment was not seconded during the committee meeting. Rather, the committee voted to report the bill in for passage as is.
Further, any amendment must be put in writing and discussed when the bill goes through second reading.
The Committee is to discuss the bill again before reporting it to the chamber for a vote on Wednesday.
