The Executive Director of the Retirement Fund Vaitautolu Talia Iaulualo said in their meetings with the Acting Treasurer Brett Butler and Governor’s Office attorneys, the Retirement Office recommended that interest from the income earned from ARPA funds be used to pay down the unpaid contributions to the Fund.
He was speaking at the Tuesday’s hearing of the House Retirement Committee. Butler reported that the interest from the ARPA account is more than $20 million. He told the hearing that the Governor intends to discuss with the Fono leaders how the interest would be used, with consideration given to paying the debt to the Retirement Fund.
Butler reported that as of Monday, January 26, all of the employer contributions have been paid up. ASG still owes $18.5 million of the employer contribution. This amount is based on an 8% contribution rate, instead of the 14% rate set by law.
Butler said the administration is submitting to the Fono in the coming weeks, a bill to amend the statute to reduce the employer contribution from 14% to 8%. He said the government just can not afford to pay the 14% contribution rate.
Butler also informed the committee that the government was now paying more than $580,000 to the Retirement Fund every pay period which covers the employee contribution of 6% and the 8% employer contribution.
The director of the Retirement Fund Vaitautolu said it’s imperative that the government pay what is owed at this time and they had recommended use of the interest from ARPA money to pay what’s owed to the Retirement Fund. They have been waiting for a response from the government.
Vaitautolu also pointed out that some of the semi-autonomous agencies have already paid the amount provided by statute, so if the employer contribution rate is reduced, refunds have to be issued to those authorities that have already paid 14%.
He also explained that the Board of Trustees has considered a Cost of Living Adjustment (COLA) for retirees, as the last COLA was implemented in 2018. But he said the board is proceeding cautiously with the government not paying what is owed.
