Dear Editor,
As a board member, officer, and member of the Fund, I feel compelled to address members of the Fund directly about administrative developments and oversight of our government employees’ retirement fund. This letter reflects my views as a Fund member, not as a representative of the ASGERF board.
I am deeply concerned about the transparency, accountability, and objectivity essential to protecting your hard-earned retirement savings. The Senate leadership’s drive for a constitutional amendment enabling the Fono to override executive vetoes aims to balance power within American Samoa’s government. However, this pursuit of self-governance has highlighted concerns within ASGERF governance, particularly where checks and balances are crucial to effective fund management and oversight. Below are several pressing issues affecting ASGERF governance:
- Conflict of Interest and Oversight Issues
The Senate president holds dual roles as trustee and chair of the ASGERF board, while the Senate’s legal counsel also serves the Fund. This overlap compromises objective oversight as the Senate reviews broader government departments and agencies, including ASGERF.
- Lack of Transparency in Budget Review
The ASGERF board reviews the Fund’s budget, while the Fono reviews the budgets of other government departments. The board chairman, also the Senate president, has shown leniency in the Fund’s budget process, possibly due to his dual role as part of the Fund’s board. By contrast, Fono’s budget review process is more rigorous and scrutinizing for other departments. Although board trustees have requested a more detailed, timely budget process, comprehensive budget details for FY-2025 remain outstanding. This disparity in budget handling raises questions about transparency and accountability in ASGERF expenditures.
- Absence of Performance Reviews for Leadership and Service Providers
Despite a Senate measure allowing the impeachment of agency heads, the ASGERF executive director (ED) and legal counsel have had their contracts renewed without performance evaluations. Calls for transparent reviews and open advertisements for these positions were dismissed, underscoring a gap in accountability within Fund management and oversight.
- Fund Expenditures for Fono-Related Travel
The Fund has paid Fono members’ travel to off-island ASGERF annual meetings. Holding these meetings locally could allow member accessibility and participation, reduce travel costs, and represent a more cost-effective approach.
- Fono Members’ Compensation and Contributions to the Retirement Fund
Current laws grant Fono members a choice between a $25,000 base salary with a $65,000 tax-free office allowance or a fully taxable $95,000 salary. Members may also choose to join the Fund. This structure allows those selecting the tax-free allowance to contribute minimally in taxes while the government continues its 14% payroll contribution to the Fund. This setup contrasts sharply with the financial realities for retirees: 27% receive a monthly pension of $500 or less (including 27 retirees receiving under $100), and 54% receive a pension of under $1000—all of which is subject to income tax.
- Large Expenditures and Limited Transparency
Significant past expenditures in 2019, 2020, and 2021, along with an allocation to a now-closed Hawaii-based LLC owned by the Fund, remain ambiguous. Efforts to clarify these transactions have been unsuccessful, raising further transparency concerns.
- Delays in Fund Audits
Although the Territorial Audit Office (TAO) scheduled a Fund audit for this year, Fund leadership has delayed this essential review. Regular performance audits are critical to accountability and to safeguard member assets.
- Cultural Influences on Decision-Making
Samoan cultural respect (ava fatafata) often affects decision-making within the Fund, leading to deference to the chairman, a prominent political and cultural leader. This influenced a lot of key decisions during his tenure as chairman. While cultural values are integral to our society, they should not override the transparency and accountability required for responsible Fund management, administration, and oversight.
- Importance of Administrative Rules and a Strategic Plan for Good Governance
A 2007 global pension study by Professor Keith Ambechtsheer (University of Toronto) concluded that poor governance can reduce pension plan returns by 1% to 2% annually. Good governance in ASGERF requires clear administrative rules and a comprehensive strategic plan. Despite an executive order from the governor in 2022 mandating administrative rules for all departments and agencies, the Fund has yet to establish these essential guidelines. Furthermore, the Fund lacks a multi-year strategic plan to outline its goals, objectives, strategies, action plan, and timeline.
The absence of administrative rules and a strategic plan weakens accountability and leaves the Fund vulnerable to poor governance practices, which may negatively impact pension portfolio returns on investment. Establishing these documents is critical to the Fund’s fiduciary responsibilities and to maintaining its integrity and growth.
- Fund Communication with Stakeholders
While the Senate has modernized its communications, including live proceedings, the ASGERF lags far behind. As likely the only pension system in the U.S. without a website, the Fund lacks a consistent channel for updates. Since my board appointment in early 2022, no press release has been shared with stakeholders—including members, administrators, Fono, and the tax-paying public—regarding annual board meeting results. This lack of communication is inappropriate for a public pension fund, where transparency, accountability, and timely information should be paramount.
- Rising Income Inequality and Economic Impact
A recent study by the National Conference on Public Employee Retirement Systems (NCPERS) concluded that actions to reduce income inequality—such as implementing a progressive income tax system, broadening access to pensions, increasing investment in public education, and promoting workers’ rights to organize—are associated with a positive “trickle-up” effect, benefiting all levels of the population. The ASGERF plays a critical role in our local economy by disbursing over $2 million monthly in retirement, disability, and beneficiary benefits, directly supporting the territory’s economy. Strong government leadership is essential to implement policies addressing income inequality and ensuring the long-term sustainability of the Fund and the territory’s economic well-being.
A Call to Action
I encourage Fund members to consider forming an ASGERF Members Association for these reasons. Such a group would empower you to voice concerns, advocate for transparency, and hold the Fund’s administration accountable. An organized association could provide legal counsel, raise awareness, and ensure fiduciaries honor their responsibilities. Your involvement is crucial to safeguarding the Fund’s integrity and the future security of your retirement. Remember, you are the rightful owners and beneficiaries of these assets. As such, you bear the cost should these assets be mismanaged or prove unsustainable.
Conclusion
I submit this letter with the utmost respect and the best intentions for the integrity, solvency, and growth of the Fund and the well-being of hardworking members and their families.
Fa’afetai tele,
Fuiavailili Keniseli Lafaele
