Senators amend and pass bill to raise cap on local investments made by Retirement Fund
Pago Pago, AMERICAN SAMOA — The Senate in its regular session last Thursday amended and passed in the final reading, its bill to raise the cap on local investments by the American Samoa Government Employees Retirement Fund (ASGERF).
The original bill called for the removal of the 17% for local investments altogether however, chairman of the Budget and Appropriations Committee, Senator Utu Sila Poasa instead moved an amendment to raise the cap to 60%.
In a Senate hearing last Tuesday ASGERF Director Vaitautolu Talia Faafetai testified that their office and the Board of Trustees of the Retirement Fund support the bill.
Vaitautolu stated that currently, there is no limit on investments made in Hawaii and the mainland and even foreign markets. But this is not the case with investments made locally.
However, he revealed that all the investments made locally by the Fund including government loans have been successfully paid with interest.
The Retirement Fund director said that he does not know why the 17% cap was put in place when this legislation was put together, but he believes it was done so that government loans would not exceed this amount.
However, he argued that this was holding back the Fund from investing more funds locally.
According to Vaitautolu, there is about $170 million in the Fund.
The Retirement Fund Director voiced his support for the bill because it is helping government institutions.
He pointed out that it is the most secure investments because loans and repayment of the amount loaned together with the interest accrued, is guaranteed.
When asked if current local investments had exceeded the 17% cap, he said no and explained that the only investment by the Fund in ASG were the funds loaned to ASTCA. He pointed out that the payments are on time and the balance is now below $9 million.
Senator Malaepule Saite Moliga expressed his concerns that if the cap on local investments were done away altogether, he questioned if the ASGERF Board of Trustees would be allowed to invest in ASG only or would they be able to invest in private companies.
Malaepule quoted as an example, ASGERF’s investment in the Hawaiki Cable Project which had been intended to help American Samoa join the rest of the world in the state of technological development and create a new connectivity hub for the Pacific.
“We have nothing to show for that multi-million dollar investment, and while other Pacific countries are benefitting from it, we are suffering,” Malaepule pointed out.
However, he agreed with Senator Utu that an increase of 30% or 50% in the cap would be sufficient for now in case something big happens in the world market, and there will still be funds to invest.
Senators Tuiasina Dr. Salamo Laumoli and Alo Dr. Paul Stevenson advised to move with caution and monitor the international market.
Senator Togiola Tulafono echoed the Retirement Fund Director’s sentiments that local investments are the most secure because the funds are loaned and used for projects that benefit the people of American Samoa, and ASGERF will be guaranteed a profit from the interest accrued.
“Director Vaitautolu forgot to mention the other reason why I believe local investments are important,” Togiola said. “Because all the funds go to the investment and nothing goes to pay an investment counselor like off-island investments. Ever since I was involved with the Retirement Fund off-island investment procedure, this “middle man” doesn’t do all that much. He just submits a two-paper report saying that according to his research, the market is good and we should seize the moment and proceed with the investment.
“But we all know the many instances where we have lost funds because of bad investment decisions. And when we lose out, the Retirement Fund loses money but this middle man still gets his fee!
“And the other thing, everybody involved in local investments are our own people and they know that it is in their best interests and that of future generations, to do everything in their power to make sure the Retirement Fund grows every year.”
In the end, senators supported the amendment moved by Senator Utu and voted to raise the cap to 60%.
Chairman of the Senate Retirement Fund Committee Senator Soliai Tuipine Fuimaono reported the amended bill with the committee’s recommendation to pass it in third reading in last Thursday’s regular session.
Senate members voted unanimously to pass the bill and amendments.
This is not a new motion by the Senate on this issue, in 2018 the Senate rejected a proposal raising the local investment from 17.5% to 35%. In committee discussion, one of the main concerns of senators was brought up by then Sen. Nuanuaolefeagaiga Saoluaga T. Nua, who insisted that the committee have an actuary report on the impact the proposed change would have on the Retirement Fund for review, before any decision was made.
The senator also argued that under provisions of the Retirement Fund statute, an actuary report is required from the Retirement Fund for review by the Fono when there are proposed changes to the law.
It’s not known if an actuary report was made available to Senators before the amendment was introduced to raise the local investment this time around. However, it is doubtful, as information about the Retirement Fund’s worth and assets seemed to have been summarized by ASGERF Director Vaitautolu Talia Faafetai in last week’s Retirement Committee hearing on the issue when he appeared to testify.
Vaitautolu told senators that there is about $170 million in the Fund, and he and the board of directors of the Retirement Fund are for the amendment to raise the local investment from its current 17% ceiling.