American Samoa Senate Told There Are ‘No Problems’ With Retirement Fund

Gubernatorial campaign ads raised questions into financial stability of fund

By Fili Sagapolutele

PAGO PAGO, American Samoa (The Samoa News, August 24, 2016) – The ASG Employees Retirement Fund is doing well and its most current portfolio is valued at $185 million-plus, says Retirement Fund Office executive director Talia Fa’afetai Iaulualo, who points out that Fund investment in international markets has been withdrawn and now invests only in the US market.

Talia was testifying Monday before the Senate Budget Committee, who’s chairman Sen. Laolagi F.S. Vaeao called a hearing after statements and advertisements — in both newspaper and radio — by the Faoa and Sanitoa gubernatorial team appears to claim that the Fund may be in jeopardy and losing money.

Because of these announcements, Laolagi said that there have been concerns raised from members of the public as to whether there are problems with the Fund.

“To me, as a senator and community leader, I can’t ignore these concerns. I can’t just sit without addressing these concerns,” Laolagi told Samoa News before the hearing. “And I believe that it’s important for senators and the public to get a better understanding on the status of the Fund.”

One of the Faoa-Sanitoa campaign ads put out early this month on the Retirement Fund points out that the Fund has become an ASG source for loans and refinancing and this practice needs to be stopped. Additionally, the ad disagrees with increasing the number of board members from 5 — many years ago — to 7 when the Lolo Administration took office. It says the make-up of the board needs to be “free from politics”.

“We must ensure the survival of our Retirement Fund by proposing well developed long-term plans formulated to avoid catastrophes like how its seen in Puerto Rico and other states whose pension programs have gone bankrupt,” the ad said.

During the Senate hearing, Talia informed senators that the “truth of the matter is” there are no problems faced by the Fund, which is doing very well and it’s also safe and secure with investment markets.

“As of last Friday (Aug. 19), the value of the Fund is at $185.53 million,” Talia said and stressed, when asked by other senators, that the Fund is going well and secure.

During a Senate hearing in February, the Fund’s off island consultant Jim Carroll told senators that the value of the fund at the time was at $169 million, adding that as of last September the value of the Fund’s portfolio was $185 million — down from previous years, where is was over $200 million.

At Monday’s hearing, Sen. Magalei Logovi’i, a former Fund board member, asked which markets the Fund is no longer investing in and Talia first pointed out that in the past about 40% of the Fund’s investment portfolio was invested in international markets, where it was closely monitored by the board and investment advisors as there were incidents of concerns globally in Asia, especially in Europe. And just recently, Great Britain withdrew from European Union, which has caused concerns in the market.

Early this year, the board and investment advisors agreed to move all fund investments from overseas markets to the US market, he said, adding that recently, the European market dropped by up to 9% and “our Fund investments are safe as they were already moved to the US markets.”

If Fund investments were still in the European markets — when it dropped — the current value of $185 million-plus for the Fund would have been much lower, he said, adding that the board and Fund investors made a very wise and good decision to take investment out of the European market in advance.

He pointed out that when the market crashed in 2008, over $45 million was loss in the value of the Fund.

At the end of the hearing, the committee requested the FY 2015 audit of the Fund as well as the latest financial report, which Talia said it would be provided to the Senate.

Laolagi said he is thankful that the Fund is doing well and is also secure. Several senators impressed on Talia the importance of keeping the Fund secure because for not only current retirees but for future ones.

The Samoa News
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