Senate tries again to increase contributions to Retirement Fund
Pago Pago, AMERICAN SAMOA — Another bill is before the Senate seeking to increase the contribution rate for both government and employees to the ASG Employees Retirement Fund (ASGERF) after a similar measure — approved by the Fono in the first regular session — was vetoed by the governor.
The new bill, sponsored by Sen. Utu Sila Poasa and introduced yesterday, is assigned to the Senate Retirement Committee with a hearing set for next week.
The proposed law, seeks a “1% increase” to be added to the government’s current 8% contribution rate for “over a period of 5 years. The contribution rate shall be capped at 13 percent at the end of 5 years.”
For the employee, current law has the contribution rate at 2.85% and the Senate bill amends this provision to show “3” percent — which has been the percentage being used over the years in testimony in the Fono as well as in several government reports.
And beginning October 1, “2021”, the bill states “an additional 2” percent is added to the employee contribution rate — which totals 5% for an employee.
According to the bill’s preamble, ASGERF contributions have not seen an increase for years, despite reports from the Fund’s leaders who state that “we must increase total contributions from 11% to 18% if we are to keep our funds viable long term.”
Furthermore, records from ASGERF presented to the Fono show that the Fund paid out $25.3 million in benefits and refunds but it only brought in $10.8 in contributions — $7.8 million from ASG and $3.02 million from employees.
Additionally, the $14.5 million shortfall between contributions and payouts was paid from the Fund’s investment earning.
The preamble noted that “it is imperative for us to increase the contributions” from both ASG and employees “if we are to keep our Fund solvent for our future generations.”
The bill, however, does not provide a specific source of funding for the proposed increase in ASG’s contribution rate.
Early this year the Fono, during its First Regular Session, passed a similar bill: “3% increase” to be added to the government’s contribution rate while the members’ contribution raises from 3% to “5%”.
But on Apr. 8th, Gov. Lemanu Peleti Palepoi Sialega Mauga vetoed the bill, which originated from the Senate — and gave two reasons behind rejecting the measure. 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.”
Lemanu recommend a 1% increase for the Government contribution and a 1% increase for the Members’ contribution.