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Gov Lemanu vetoes bill hiking Retirement Fund contributions

Gov. Lemanu Peleti Palepoi Sialega Mauga

Pago Pago, AMERICAN SAMOA — Gov. Lemanu Peleti Palepoi Sialega Mauga has vetoed a Senate bill approved by the Fono during the First Session of 37th Legislature that increases the contribution rate for both government and employee to the ASG Employees Retirement Fund (ASGERF).

The governor’s veto action was outlined in an Apr. 8th letter to Fono leaders, who were informed of the two reasons behind rejecting the measure, which lawmakers have said would cover the shortfall in payouts from the Fund every year.

According to the governor, the bill does not identify a funding source for the increase in the government contribution and, in addition, the raise in government and employee contributions “are too high”.

“I recommend a 1% increase for the Government contribution and a 1% increase for the Members’ contribution,” Lemanu said, adding that, “I will be happy to work with the Legislature to shape a bill that is in the best interest of the people of American Samoa.”

The current 11% contribution to the Fund — as dictated by law — breaks down to 8% from the employer and 3% by the employee.  But this rate has been described by some lawmakers in the past as inadequate because there is more money going out than money coming in to the Fund.

The Senate bill, seeks a “3% increase” to be added to the government’s contribution rate while the members’ contribution raises from 3% to “5%”.

During a Senate committee hearing on the measure in February, Retirement Office executive director I’aulualo Fa’afetai Talia informed senators that the Fund pays out between $23 million to $25 million a year while the contribution from employer and employees is only $10 million.

And it is income earned from investments that covers the shortfall of payouts. He along with the Fund’s board chairman supported the proposed hike.

During a House committee hearing on the legislation, ASG Treasurer Malemo L. Tausaga gave an estimate of about $8.2 million to be paid by ASG and $3.2 million to come from members under the contribution rate hike proposed in the bill.

He said the estimates cover roughly, 4,000 ASG employees and do not include the authorities — LBJ Medical Center, American Samoa Power Authority, American Samoa TeleCommunications Authority and American Samoa Community College.

The contribution rate to the Fund is expected to be taken up again when the Fono convenes in July for the 2nd Regular Session of the 37th Legislature, at which time the fiscal year 2022 budget would be the priority issue on the agenda.