Retiring in American Samoa

The Marianas Variety - American Samoa Retirement Fund may be in bankruptcy in 2040.

Samoa News - The increase in the contributions of employees and employers to the American Samoa Government Employees Retirement Fund is the "most effective" way to tackle the fund's uncovered liabilities and has been advised by the fund's actuaries and advisors, says Va'anatiu Tofala Iafeta, CEO of the Retirement Fund.

Most recently, the Executive Committee hosted a meeting in Honolulu with the Fund's Actuary Advisor, Sage View, and the Fund's Asset Advisor, Jim Garrels, to provide the Executive Committee with a better insight into the support it needs to restore the value of the pension funds.

As proposed by the Insurance Statistical Survey, the committee outlined its request to raise dues from members, from the present 11 per cent composite dues (3 per cent from salaried employees and 8 per cent from employers) to 15 per cent or 16 per cent. 16 million $11 total, while benefits to members added up to $23. 94 million.

"The $12 million deficit is compensated by the fund's investment over all these years, and so the fund has outlived - through investment," Va'anatiu said to Samoa News. In order to correct the deficit, the insurer and advisor advised, and the Executive Committee approved - after a "thorough examination and examination of all available options" - that the "most efficient way to help boost fund contributions", he said, and added that the Executive Committee proposes that the fund premium would be increased by 3 per cent by the worker and 2 per cent by the company.

In the view of the Chairperson, the Executive Committee considered the effects of such an increment on contribution payers, especially staff, when it is applied at once; and says that it was proposed at the Honolulu session to carry the increment over a three-year timeframe. One example - for our staff - would be 1 per cent per year from 2017 to 2020.

This would be 1 per cent for the employers in 2017 and the other 1 per cent in 2018. Overall, the premium rate hike would amount to 5 per cent and reach the required rate of 15 to 16 per cent step by step. "He added that other small problems that helped to create uncovered liabilities were things like staff who joined the fund and then retired from public services with high salaries in comparison to years ago.

"It' s important - we must take courageous choices to safeguard the fund, which is very important for coming generations," said Va'anatiu, who said that the Executive Committee intends to put forward the Fono's increased contributions suggestion this year, which will come back to the meeting in July. Mr Samoa News pointed out that an increased employee contributions could mean less purchasing strength for the consumer.

When asked about his response, Va'anatiu replied that it would be more beneficial to protect the fund now for the foreseeable horizon. As a reminder to staff, increasing the fund contributions is "your own cash, your fund life-cycles. "He noted that it is very hard for people living nearby to cut about 2% of their salary per wage per month, but in this case the worker saves this "money" for the long term when that individual goes into retirement.

At the time of the Honolulu Summit, the Fund's investment holdings stood at $184 million, he said, noting that despite the instability of global economies, the Fund's investment is "developing very well" and is therefore able to offset the yearly deficit from members' dues. It emphasised that the advisors who advised the Management Committee on changes in the situation in the market are monitoring the fund's investment activities carefully.