House Speaker Savali Talavou Ale informed members of the House last week there is a possibility the administration may challenge the employer contribution to the American Samoa Government Employees Retirement Fund, which according to legislation that went into effect in 2022, should be 14 percent.
The Speaker said the purported basis for the challenge, according to information he has received, is that an actuary report was not presented to the House and Senate before legislation to increase the contributions was approved.
According to Chapter 14, Section 7.1405 of the American Samoa Code Annotated, “All proposed legislation which concerns membership in the Retirement Fund, Benefits paid by the Fund, Contributions to the Fund, Investment of Fund assets, or management of the Fund shall be referred to the Senate and House Retirement Fund Committees.
Before the final vote is taken in either the Senate or House on any such legislation, the Retirement Fund Committee of that body must submit to the voting members a written report from both the actuary and the Board of Trustees regarding the proposed legislation.
“The actuary report shall indicate the financial impact of the legislation on the future solvency of the Fund and future benefit payments. The report of the Board of Trustees shall contain its recommendations concerning the legislation—whether the Board supports or opposes it, any recommended changes, and the board’s detailed reasons.
“Any legislation which is passed but which does not follow the procedures set forth in this section is null and void.”
The law that went into effect in 2022 provided for yearly incremental increases to the employee and employer contributions to the Retirement Fund from October 1, 2022, through October 1, 2024. The initial increase was from 8 to 10 percent for the employer and from 3 to 4 percent for employees. By October 1, 2024, the contributions rose to 14 percent for the employer and 6 percent for employees.
The Speaker said the Fono passed the increases based on the recommendations of the Retirement Fund Office and Board of Trustees, as well as an actuary’s report showing that the Fund would face bankruptcy if the unfunded liability was not addressed.
The Chair of the House Retirement Committee, Rep. Trude Ledoux-Sunia quoted a report from the Retirement Fund Office that for the last two pay periods, ASG had paid only 8 percent in employer contributions instead of the required 14 percent. According to the report, ASG’s debt to the Retirement Fund is $21.7 million which does not include the more than $2 million owed by the LBJ Hospital and American Samoa Community College in unpaid contributions. The American Samoa Power Authority is up to date with its contribution payments.
