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Chapter 14 - Government Employees’ Retirement Fund

Chapter 14 - Government Employees’ Retirement Fund

7.1401 Purpose and intent.


(a) The purpose of the Government Retirement Fund shall be to provide retirement annuities for the employees of the government who become aged, thereby enabling the employees to accumulate reserves for themselves in order to meet, without prejudice or hardship, the hazards of old age upon termination of their government service. It is the further objective of this fund to act as a strong incentive in attracting qualified personnel to enter and remain in government service to the end that their talents may be utilized for the sake of achieving greater economy and efficiency in the administration of the government.

(b) It is the intention of this chapter that the payment by the government of the required contributions and all allowances, annuities, and benefits shall be obligations of the government.

7.1402 Title of fund.


The fund shall be known as the “American Samoa Government Employees’ Retirement Fund”. In such name or for the account thereof all of its business shall be transacted, all of its money invested, and all of its cash, securities and other property shall be held.

7.1403 Definitions.


As used in this chapter:

(a) “Actuary” means any actuary that is qualified and has been engaged by the Board to provide actuarial services.

(b) “Average annual salary” means the highest average annual salary received by a member during any 3 consecutive years of creditable service accruing to a member. Overtime compensation shall not be considered when calculating a member’s average annual salary.

(c) “Board” means the Board of Trustees provided for in this chapter as the agency responsible for the direction and operation of the affairs and business of the Retirement Fund.

(d) “Creditable service” means service credited for purposes of computation of benefits, and may not exceed 30 years of creditable service.

(e) “Early retirement date” means the date on which a member attains age 55 and 10 years of creditable service, or a later date elected by the member.

(f) "Employee” means any person in the employ of the government, in all occupational classifications.

(g) “Fiscal year” means the period of twelve consecutive months beginning on the first day of October each year.

(h) “Fund” means the “American Samoa Government Employees’ Retirement Fund”.

(i) “Fund-year” means a period of 12 consecutive months beginning 1 October 1981 or any 1 October thereafter.

(j) “Member” means any active, inactive or retired participant in the Fund.

(k) “Membership service” means service rendered on or after the operative date of the fund.

(l) “Normal retirement date” means the earlier of the dates on which the member attains age 65 and 5 years of creditable service or the member attains age 55 and 30 years of creditable service.

(m) “Operative date” means 1 January 1971, the date upon which the Fund is to begin operations.

(n) “Prior service” means service rendered prior to the operative date of the Fund.

(o) “Regular interest” means such rate as shall be fixed by the Board; provided, that for the first 5 years of operation of the Fund, the regular interest shall be 3 percent per year, compounded annually.

(p) “Salary” means the amount received by an employee for service.

(q) “Service” means actual employment by the government as an employee for salary or compensation, or service otherwise creditable as herein provided.

(r) “Spouse” means the husband or wife of, a member to whom the member was lawfully married.

(s) “Total service” means prior service, membership service and military service.

7.1405 Legislative changes.


(a) The Senate and the House of Representatives shall establish retirement fund standing committees.

(b) All proposed legislation which concerns membership in the Fund, benefits paid by the Fund, contributions to the Fund, investment of Fund assets, or management of the Fund shall be referred to the Senate and House Retirement Fund Committees.

(c) Before the final vote is taken in either the Senate or House on any such legislation, the retirement fund committee of that body must submit to the voting members a written report from both the actuary and the Board of Trustees regarding the proposed legislation. The actuary’s report shall indicate the financial impact of the legislation on the future solvency of the fund-and future benefit payments. The report of the Board of Trustees shall contain its recommendations concerning the legislation: whether the Board supports or opposes it, any recommended changes, and the board’s detailed reasons.

(d) Any legislation which is passed but which does not follow the procedures set forth in this section is null and void.

7.1410 Board of Trustees—Term of office.


(a) The responsibility for the proper administration of the fund and the direction of its policies shall be vested in a Board of Trustees consisting of five members as follows: three members appointed by the Governor, who shall be members of the Fund having at least five years of service; and two members appointed by the Governor who shall not be members of the Fund. The Governor, in consultation with the Board will decide upon suitable candidates to fill any Board vacancy or vacancies. The Governor will choose his appointee(s) from among those individuals and send the name(s) to the Legislature for confirmation. The Board shall select its own chairman.

(b) The term of office of the members shall be 5 years except that the original appointees shall be appointed for terms of 1, 2, 3 and 4 years. As their terms expire, new members shall be appointed to fill vacancies and such appointments shall be made for terms of 5 years. A trustee can be removed from the Board by the Governor only for breach of his fiduciary responsibilities or for just cause.

7.1411 Board of Trustees—Duties.


The Board of Trustees shall have, in addition to other duties arising out of this chapter. the following duties:

(1) establish and maintain an office, in the facilities provided by the government; provided however that should the trustees determine that facilities provided by the government are inadequate, appropriate facilities may be built or leased by the Fund, for the meetings of the Board and the keeping of the books, accounts and records of the fund; hold regular meetings bimonthly, and such special meetings as may be deemed necessary; and keep a full record of all of its proceedings, which shall be open to inspection by the public;

(2) hire an Executive Director who shall be directly responsible to the Board for the management of the Retirement Fund and the Retirement Fund Office;

(3) provide for the installation of a system of accounts and records which will give full effect to the requirements of this chapter; adopt all necessary actuarial tables to be used in the operation of the Fund: and provide for the compilation of such statistical and financial data as may be required for actuarial valuations, periodic surveys and calculations;

(4) obtain such information from the participating members and the government as shall be necessary for the proper operation of the Fund;

(5) consider and pass upon all applications for annuities, benefits, refund and other payments, and authorize the expenditures for such purposes, in accordance with the provisions of this chapter; the Board may delegate this duty in whole or in part, to the executive director;

(6) accept any gift, grant, or bequest of any money or property of any kind, for the purposes designated by the grantor if such purposes are specified as providing cash benefits to some or all of the members or annuitants of the Fund: if no such purposes are designated, the same shall be credited to the account representing income from investments;

(7) have the accounts of the fund audited at the end of each fiscal year by a certified public accounting firm, and submit an annual report to the Governor and Legislature no later than 120 days following the close of the fiscal year embodying, among other things. a balance sheet showing the financial and actuarial condition of the Fund, a statement of income and expenditures for the year, a statement showing changes in the asset, liability and reserve accounts during the year. a statement of investments owned by the Fund, and such other financial and statistical data as are necessary for proper interpretation of the condition of the Fund and the results of its operation: the Board shall also cause to be published for distribution among the members a synopsis of such report;

(8) the board or its qualified agents or custodians shall hold, for the fund title to all assets of the Fund;

(9) establish and promulgate rules and regulations, not inconsistent with this chapter, determined necessary by the Board to carry out the purposes of this chapter.

7.1412 Executive Director—Duties.


The Executive Director shall be in charge of the administration of the detailed affairs of the Fund. He shall keep all books, records, files, and accounts of the Fund and receive all applications for annuities, benefits, and refunds. He shall prepare periodic reports relative to the operations of the fund and an annual report at the close of each fiscal year reflecting the results of the financial operations of the Fund and embodying all important financial and statistical data pertinent to its operation.

7.1415 Employment of an assistant director, staff and professional services.


(a) Subject to the approval of the Board, the Executive Director may employ an assistant director and such clerical, medical or other assistance as shall be necessary for the proper administration of the fund. Subject to the approval of the Board, the Executive Director may also engage actuarial, accounting or other professional services to assist in the preparation of the annual reports, to advise in matters of policy, and to make the periodic actuarial surveys. The executive director, assistant director and full-time clerical staff are employees of the government fund, under the direction of the Board.

(b) Legal services shall be provided by the government through the appropriate department. The board may, however, employ independent legal counsel if in its opinion, such services are necessary.

7.1416 Indemnification


The Fund shall save harmless, indemnify and defend all Trustees of the Board, officers, employees and attorneys of the fund from financial loss arising out of any claim, demand, suit or judgment by reason of alleged negligence or other act by such trustee, officer, employee, or attorney provided that such trustee, officer, employee, or attorney at the time of such alleged negligence or act was acting in good faith, with prudence and due diligence in the discharge of that person’s duties and within the scope of his employment, and that such damages did not result from the willful and wrongful act or gross negligence of such trustee, officer, employee or attorney.

7.1420 Members of fund.


The following employees shall be members of the Fund and subject to the provisions of this chapter:

(a) All employees, regardless of age or length of service, in the service of the government on the operative date of the fund, shall become members of the Fund by virtue of their employment.

(b) Any person on an approved leave of absence on the operative date, on account of disability or military service, shall be subject to membership as of such date as though he were in active service. If such leave of absence is for any other cause, such person shall be subject to the membership as of the operative date only if the leave of absence is extended, in the aggregate, for less than one year after the operative date.

(c) All qualified persons becoming employees after the operative date shall become members as a condition of employment.

(d) Elective officers, including but not limited to the Governor and Lieutenant Governor, and members of the Legislature; provided, however, any elective officer may decline membership in the fund by notifying the board in writing of his intent to do so.

(e) Employees of the Fund under the direction of the Board, unless ineligible pursuant to 7.1421.

(f) The employees of the Development Bank of American Samoa, unless ineligible pursuant to 7.1421, provided that the bank makes payment to the Fund for all prior service credit as determined jointly by the trustees of the fund and the directors of the bank.

7.1421 Persons ineligible for membership.


The following employees are not eligible for membership in the Fund:

(1) a person occupying a position whose duties will not permit service for more than 100 days per year;

(2) a person whose services are compensated on a fee basis;

(3) an independent contractor;

(4) a person whose employment is purely temporary, seasonal, intermittent, part-time or only for a specific project;

(5) an employee who is a member of any other retirement system except the military, and who is accruing creditable service in that system, unless the employee terminates his membership in the other system. This provision does not apply to former government employees with ten years vested interest; and

(6) an employee of the government for a definite or fixed term; however, notwithstanding the foregoing, judges, district, county and village officials and employees, department heads and executive level appointees, and noncareer service employees of the Legislature, other than contract employees are eligible for membership.

7.1430 Credit


(a) Credit for service prior to the operative date of the Fund is granted as follows:

(1) Every employee who becomes a member of the fund on its operative date shall be entitled to prior service credit, without cost to himself, for periods of prior employment during which he has rendered service to the government.

(2) An employee who becomes a member and whose work schedule prior to the operative date of the fund required employment for less than 12 but more than 2 months in a calendar year, may be granted prior service credit for the months of inactivity by payment to the Fund before 1 January 1983 of the contributions which the employee would have paid had the employee been continuously employed and had the Fund been operative at that time.

(3) Persons who become members and who have held elective offices in the government before the operative date of the Fund shall be granted prior service credit for the length of the actual terms of office: provided, however, that any person applying for prior service credit under this subsection shall not receive prior service credit if he is entitled to creditable service for the same period under any other provision of this section.

(4) Any employee who becomes a member of the Fund and who was a member of the Civil Service Retirement Fund of the United States Government at the operative date, whether in an active or inactive status, may be granted prior service credit only if he definitely terminates his membership in such fund, receives a refund of his accumulated contributions therefrom, and pays such amount in full, including regular interest from the date of such termination, if subsequent to the operative date, to the date of payment, to the Government Retirement Fund.

(5) Any employee not in service on the operative date, or on an approved leave of absence on such date, for disability, military leave or other cause, shall be entitled to receive credit for prior service only when such employee has completed at least 5 years of contributing membership service subsequent to the operative date.

(b) A member who was ineligible for membership in the Fund during any employment by the government prior to attaining membership but subsequent to the operative date may receive credit for that period of ineligible service if he deposits in the Fund the contributions he would have made if he had been a member of the Fund during that period together with regular interest thereon. No credit will be allowed until the de-posit is made.

(c) Credit shall be granted to any employee for active service in the Armed Forces of the United States, occurring before or subsequent to the operative date, on a year for year basis up to a maximum of 5 years credit, provided the discharge from the service is under conditions other than dishonorable.

(d) In addition to the credit authorized in the immediately preceding subsection, credit shall be granted for active service performed during a national emergency proclaimed by the President of the United States or during a national emergency or state of war declared by the Congress of the United States, occurring before or subsequent to the operative date of this title, provided the employee entered such active service while employed by the government and reenters its service within a period of 90 days following his discharge from the Armed Forces of the United States, under conditions other than dishonorable.

(e) Any person employed by the government for 10 years or more, who is a member of the fund, and who is appointed for a position within the United States Government which requires his continued residence within American Samoa and has not terminated his membership in the fund, may be allowed credit for such federal service; provided, he does not become a member of the Civil Service Retirement System; and provided further, that he pays to the fund during the years for which he claims credit as a federal employee the contributions which he would have paid had his employment been with the government, together with regular interest thereon, from the date on which such contributions would have been made had such service not been with the federal government, to the date of actual payment.

(f) Any person employed by the government who takes leave of absence without pay or terminates from such employment in order to further his education may, upon returning to employment with the government, claim retirement credit for such time spent in furthering his education, by paying to the retirement fund contributions which he would have paid had such time spent on education not been excluded by virtue of his leave of absence without pay or termination, together with regular interest thereon, from the date on which such contributions would have been made, had such time so spent not been excluded, to the date of actual payment; provided, however, that this section shall apply only to those persons who resume employment in the government within 2 years after completing their studies.

7.1431 Computation of credit.


(a) The contributions required pursuant to 7.1430 for the purchase of creditable service, with the exception of subsection (b) thereof, shall be computed by multiplying the member’s normal monthly contributions at the time the request for credit is initiated by the number of months of prior service being acquired.

(b) In the case of a member purchasing creditable service pursuant to subsection (b) of 7.1430, the number of months of prior service being acquired shall be multiplied by the monthly contributions he would have made if he had been a member of the fund during the period of prior service being acquired.

(c) In the computation of credit for service for purpose of the Fund 15 days or more of service during any month shall constitute a month of service. Service of less than 15 days during any month shall be disregarded. A year shall mean any period of 12 consecutive months and shall not be confined to a calendar year.

(d) Members failing to qualify for the 30 years maximum retirement benefits may apply unused accrued sick leave on an hour for hour basis for service credits.

7.1433 Government contributions to Fund.


(a) The government shall make contributions to the Fund each year on an actuarially funded basis as determined by the Board. Based on actuarial assumptions adopted by the Board, the actuary, with approval of the Board, will determine the normal cost contribution percentage payable and accrued benefit cost contribution percentage payable by the government during each Fund-year as follows:

(1) The normal cost contribution percentage for each Fund-year after 30 September 1981, is the percentage of aggregate compensation of all current members which, if contributed over each member’s prospective period of service and added to aggregate member contributions, will be sufficient, with addition of the accrued benefit cost, to provide for payment of all future benefits from the Fund.

(2) The accrued benefit cost contribution percentage for each Fund-year after 30 September 1981, is the percentage of expected aggregate compensation of members for that Fund-year which, if contributed during that fund-year, will be equivalent, as determined by the actuary with approval of the Board, to the accrued benefit cost contribution for that Fund-year. The accrued benefit cost contribution for each fund-year after 30 September 1981, is the level annual payment required to liquidate the unfunded accrued benefit cost at the beginning of that fund-year over the remainder of the period of 30 years beginning 1 October 1981; the accrued benefit cost contribution may not, however, be less than interest for one year on the unfunded accrued benefit cost at the beginning of such Fund-year.

(3) The unfunded accrued benefit cost at 1 October 1981, shall be $10,982,083.00.

(4) The unfunded accrued benefit cost at the beginning of a Fund-year may, at the discretion of the Board, be adjusted to take account of changes in actuarial assumptions or of changes in cost attributed to service rendered prior to that Fund-year. The adjustment resulting from changed actuarial assumptions is liquidated over a period not to exceed 15 years from the date of the adjustment. The adjustment resulting from changes in cost attributed to service rendered prior to the date of such adjustment is liquidated over a period not to exceed 30 years from the date of the adjustment. Liquidation of any adjustment is by level contributions made each Fund-year by the government, however, no contribution may be less than interest for one year on the unfunded portion at the beginning of that Fund-year.

(b) The amount of contribution for each Fund-year by the government is determined by applying the sum of the normal cost contribution percentage and the accrued benefit cost contribution percentage for that Fund year prescribed by this section to the total salaries paid to members during each payroll period that Fund-year, and all these amounts are paid into the Fund following the close of such payroll period concurrently with the member contributions to the Fund for that payroll period.

(c) All contributions to the Fund, income from investments of the Fund, and any other income accruing to the Fund is held in the Fund and used solely to provide benefits to members of the Fund and to pay administrative expenses of the Fund.

7.1434 Members’ contributions to the Fund.


(a) Each member of the Fund shall contribute 2.85 percent of the salary earned and accruing to such member subsequent to the operative date. Beginning 1 October 1981, each member of the Fund shall contribute to the Fund each fund-year 3 percent of compensation earned and accruing to each member during that year. This contribution shall be made as a deduction from salary and applies only to income earned during regular working hours. Income earned on overtime is not subject to this contribution.

(b) Every employee who is a member of the Fund shall be deemed to consent and agree to the deduction from salary, and payment to such employee of salary less such deduction shall constitute a full and complete discharge and acquittance of all claims and demands whatsoever for the services rendered by such employee during the period covered by such payment, except as to the benefits herein provided.

7.1435 Prohibition of deductions from ineligible employees’ salaries.


An employee who is ineligible for membership in the Fund shall not have any deduction made from his salary for a contribution to the Fund.

7.1436 Individual accounts for each member.


(a) An individual account shall be maintained for each member, to which shall be credited the amounts of his contributions and regular interest thereon.

(b) Regular interest on such contributions shall be credited annually, at the close of each year, and shall be allowed only on the amount of the accumulated contributions standing to the credit of each member at the beginning of each year.

7.1437 Interest of members in Fund.


Each member shall, by virtue of the payment of contributions to the Fund, receive a vested interest in such contributions, and, in consideration of such vested interest, shall be conclusively deemed to undertake and agree to pay the same and to have the amounts deducted from his compensation as provided in 7.1434.

7.1438 Transfer and attachment of interest prohibited.


The right to a retirement annuity, or refund, is personal to the recipient, and the assignment or transfer of such benefit or any part thereof shall be void, except as otherwise provided in this chapter. No annuity or refund shall answer for debts contracted by the person receiving the same, and it is the intention of this chapter that they shall not be attached or affected by any judicial proceeding.

7.1439 Refund of contributions of separated employees—Return to employment.


(a) Any member whose employment is terminated for any reason other than retirement is entitled to the return of all contributions he has made plus regular interest. Refund is made upon application by the member on a form provided by the board.

(b) Acceptance of this refund terminates membership in the fund and causes forfeiture of any further benefits.

(c) A member whose employment is terminated for any reason before he is eligible for vested retirement may leave his accumulated contributions in the fund, and they shall continue to earn regular interest. After 5 years the board may cause a member’s accumulated contributions to be forfeited if they total less than $25.00.

(d) A member whose employment is terminated for any reason after he is eligible for vested retirement may leave his accumulated contributions in the fund in order to be eligible for vested retirement benefits.

(e) Should a member in an inactive status return to government employment, he shall resume active fund membership with full credit for service previously rendered.

(f) A former member reentering government employment after having withdrawn his accumulated contributions (thereby terminating membership in the fund) must redeposit the amount of his previous refund with interest from the date of payment in order to obtain credit for such service.

(g) The withdrawal privilege granted by this section applies only to members whose employment has been terminated.

7.1440 Withdrawals by employees prohibited.


An active member may not withdraw any of his accumulated contributions during his employment.

7.1441 Retirement—Voluntary and mandatory—Elected officials may finish term.


(a) Notice. All employees must be advised of their eligibility for normal or early retirement upon attaining the necessary age and creditable service. However, failure to receive the notice shall not prevent the retirement or postpone the retirement date.

(b) Voluntary Retirement. Any member of the fund may voluntarily retire if he is at least 55 years of age and has completed 30 years of creditable service or has reached 65 years of age with 5 years of creditable service. Any member qualified for retirement under this subsection may apply for retirement on forms provided by the board. His retirement shall be executed on the day he specifies; provided, however, the retirement may not be less than 30 days nor more than 90 days after the date the application is filed.

(c) Medical Separation. (1) A member who has attained his normal retirement date or early retirement date may be involuntarily separated and entitled to an immediate unreduced retirement annuity if it is determined by the Board after certification of the Director of Health, that the member’s health is not likely to improve; provided, the member is not eligible for workmen’s compensation for the condition causing the involuntary separation.

(2) A member who has not attained his early retirement date and who has contributed to the fund for at least 5 years may be separated and entitled to an immediate unreduced retirement annuity if it is determined by the Board, after certification of the Director of Health, that the member’s health prohibits him from satisfactorily performing the duties of any assigned position in the service of the government; provided, the member is not eligible for workmen’s compensation for the condition causing the separation.

(3) At least once each year during the first 5 years following the approval of a medical retirement annuity to a member under subsection (2) and at least once in every 3-year period thereafter, the board requires the disabled annuitant to undergo a medical examination at the place of residence of the annuitant or at any other place mutually agreed upon, by a physician or physicians engaged by the Board of Trustees. If the examination indicates that the annuitant is no longer physically or mentally incapacitated for service, or that he is able to engage in a gainful occupation, payments of disability retirement annuity from the Fund shall be discontinued, and the annuitant shall be reinstated in governmental service in a position for which he is found qualified and capable of performing. However, in no case shall the payments be discontinued if the member has attained age 65.

Should the disabled annuitant become gainfully employed in any capacity and his earnings are less than his salary on his medical retirement date or the salary currently paid for a similar position, whichever is lower, the Board shall continue a medical retirement annuity in an amount which is equal to the difference, but not to exceed the amount of the medical retirement annuity.

Should any member receiving a medical retirement annuity refuse to submit to the medical examination, payments by the fund shall be discontinued by the Board until the withdrawal of his refusal and, should his refusal continue for one year all rights of the member to any medical retirement annuity are revoked by the Board. After a medical retiree reaches the age of 65, no further annual or 3-year medical examinations may be required.

(4) A member who has recovered from medical retirement and who is restored to active service immediately becomes an active member of the Fund and has member contributions deducted from his pay and upon subsequent retirement has his service retirement allowance based upon all creditable service including both that service upon which his medical retirement annuity was based and his creditable service after his recovery.

(d) Early Retirement. A member of the fund may voluntarily retire with a reduced pension if he is at least 55 years of age and has completed 10 years of creditable service.

(e) Vested Retirement. A member of the fund who separates from service on or after 1 October, 1984 and who has completed 10 years of creditable service but is not eligible for early retirement may voluntarily retire with a reduced pension as of the first day of any month after attaining age 55 provided the member does not withdraw his member contributions.

(f) A retired member receiving an annuity who is reemployed by the government in any capacity in which he again becomes a member of the fund, or who is remunerated by the government for personal services in a status other than as an employee or official for a period in excess of six months, including renewals, has his right to receive payment of his annuity suspended for the duration of his employment or contract, but all other rights pertaining to his annuity are retained by him.

7.1442 Retirement payments.


(a) Each member shall receive an annual service retirement annuity on retirement equal to 2 percent of the average annual salary of the member multiplied by his total years of service up to a maximum of 30 years. Effective immediately and payable from October 1, 2008, as applicable, the annual service retirement annuity is increased to allow for a four (4) percent increase for all retirees who have retired on, or prior to September 30, 2008. This increase shall not apply to retirees who have retired on, or after October 1, 2008.

(b) Service retirement annuities shall be payable in equal monthly installments, rounded to the nearest dollar, as life annuities, and shall not be increased, decreased, revoked, or repealed except for error, or except where specifically otherwise provided.

(c) The first payment of a life annuity shall be made pro rata for the fraction of a month elapsing between the date of retirement and the end of that month. The last payment shall be made as of the date of death.

(d) Instead of an annuity payable for the life of a retired member, the member may elect to receive a lesser retirement annuity during his lifetime but with all or a portion of that annuity continued to a contingent annuitant designated by the member at the time of retirement. The amount of the lesser annuity elected is determined by the Board so that the value of that annuity at the time of retirement will be the same as the value of the life annuity otherwise payable without an election. The election may not be permitted by the Board unless the value at retirement of expected monthly annuity payments during the life of the retired member is no less than one-half the value of the life annuity otherwise payable without such an election.

(e) Should a member who is eligible for early retirement as provided by 7.1441 retire, the amount of his retirement annuity is determined in the same manner as described, but then reduced by one-fourth of one percent multiplied by the number of completed months in the period which begins at the date of early retirement and ends at the date when the member first would be eligible to retire with an unreduced retirement annuity.

(f) Should a member who is eligible for vested retirement as provided by section 7.1441 retire, the amount of his retirement annuity is determined in the same manner as described for early retirement in 7.1442(e), but then reduced in addition by one-fourth of one percent multiplied by the number of completed months in the period which begins at the date of termination and ends at the date of the member’s fifty-fifth birthday, subject to maximum additional deduction of 15 percent. The annuity so determined, that is normal retirement annuity less deduction for early retirement and additional deduction as calculated above, will be paid to retiree or beneficiary.

(g) Should a member retire after attaining age 65, the amount of his retirement annuity is determined as described, but is additionally increased by one-fourth of one percent multiplied by the number of completed months in the period which begins on the date of the member’s sixty-fifth birthday and ends on the member’s retirement date.

(h) Not less often than once every 2 years the board recommends to the Governor, for proposal to the Legislature, that service and medical retirement annuities currently payable to retired members and other annuitants be increased or not. These recommendations by the Board are made after due consideration by the Board of current conditions, and are accompanied by a statement of the cost of any proposed increase as certified by the actuary.

(i) In addition to service retirement annuities paid under terms of subsections (a), (e) and (g) above, an additional retirement incentive benefit will be paid in accordance with the following terms and conditions:

(1) Eligibility is limited to those active members age 55 or over with ten or more years of service who are currently eligible for retirement or early retirement, and who complete application for retirement within ninety (90) days of the effective date of this act.

(2) An annual incentive benefit equal to $100.00 per year of service, up to a maximum of 30 years, will be paid on a prorated monthly basis as a supplement to the service retirement annuity until the retiree reaches the age of 62, or for a minimum period of five years.

(3) Reemployment by the government, in any capacity, will result in termination of the retirement incentive supplement and loss of eligibility for such benefits.

(4) Supplemental incentive benefits will not be considered in determining the amount of contingent annuities or for future increases authorized under subsections (a), (d) and (h) above.

7.1443 Death benefits.


(a) Should a member in either an active or inactive status die prior to actual retirement, his accumulated contributions plus interest to the date of death shall be paid to his survivors as provided in this section. Should a retired member die before the annuity paid equals the amount of his retirement contributions plus interest accumulated to his retirement date, the difference shall be paid.

(b) Under regulations prescribed by the Board, a member may designate a beneficiary or beneficiaries for the purpose of this section.

(c) Benefits authorized under subsections (a), (b), (e) and (f) of this section shall be paid to the person or persons surviving the member in the following order of precedence:

(1) to the beneficiary or beneficiaries designated by the member in a signed and witnessed writing received by the board before his death;

(2) if not the above, to the widow, or widower, of the member;

(3) if neither of the above, to the child or children of the member and descendants of deceased children by representation;

(4) if none of the above, to the parents of the member or the survivor of them;

(5) if none of the above, to the next of kin as the board determines entitled;

(6) if none of the above, the duly appointed executor or administrator of the estate of the member.

(d) Should an active member die before retirement, but after attaining eligibility for retirement, but after attaining eligibility for retirement under 7.1441 leaving a surviving spouse, the surviving spouse, if eligible, may elect to receive either the death benefits provided under this section or a life annuity payable from the Fund in an amount equal to one-half the retirement annuity that otherwise would have been payable to the deceased member had he retired on the date of his death. Should the surviving spouse die before the total of annuity payments made equals the amount of the member’s accumulated contributions and interest at his death, the difference is paid to the duly appointed executor or administrator of the estate of the spouse.

(e) In addition to benefits payable under subsections (a) or (d) above, a death benefit will be paid to the person or persons surviving a member who dies while on active status as follows in accordance with subsection (c) of this section:

(1) a benefit of $2,500.00 upon the death of a member with less than five years of service;

(2) a benefit of $5,000.00 upon the death of a member with at least of five years, but less than ten years of service;

(3) a benefit of $10,000.00 upon the death of a member with ten or more years of service.

(f) Upon the death of a retired member, a benefit of $1,500.00 shall be paid to the survivors of the retired member in accordance with subsection (c) of this section. This benefit is in addition to other benefits provided for in this chapter. Payment of benefits bars recovery by any other person.

(g) Death benefits shall not be paid for deaths by suicide, nor may they be paid to a potential beneficiary of a member who has been charged with and is subsequently convicted of the homicide of that member. Payment of benefits bars recovery by any other person.

7.1444 Investment of reserves exceeding current requirements.


(a) The reserves of the Fund in excess of requirements for current operations shall be invested and reinvested by or under authority of the Board of Trustees. At its discretion, the Board may designate one or more of its members to supervise this function; in either case, references to the Board in this section are considered to refer to the individual or committee exercising the function.

(b) The Board of Trustees has full power and authority to direct the investment and reinvestment of the fund without distinction between principal and income, in property (defined in (c) below) it considers advisable. The Board may invest and reinvest the fund in property in which a prudent man familiar with those matters and using care, skill, prudence, and diligence enterprise would invest in the conduct of like character and with like aims, insuring that the investments of the fund are diversified so as to minimize the risk of large losses unless to do so would clearly not be prudent. The power to manage investments includes, but is not limited to, the power to hold, purchase, sell, convey, assign, transfer, dispose of, lease, subdivide, or partition any assets held or proceeds thereof, to execute or cause to be executed relevant documents; to enter into protective agreements, execute proxies, grant consent; and to do all other things necessary or appropriate to its position as an owner or creditor.

(c) The word “property” means and includes real, personal, and mixed property of any and every kind and nature, including but not limited to, bonds, preferred or common stocks, mortgages, interests in any kind of investment trust or common trust fund, notes, leases, oil or gas royalties, or other evidences of rights, interests or obligations, secured or unsecured, and whether or not they are of a wasting asset nature.

(d) All proceeds and income from investments, of whatever nature, must be credited to the account of the Fund. Transactions in marketable securities are carried out at prevailing market prices.

(e) Investments may be held in bearer form, or may be registered either in the name of the fund or the nominee of the custodian.

(f) Due bills may be accepted from brokers against payment for securities purchased, pending delivery within a reasonable period of time of certificates representing the investments.

(g) Investments may not be made if, after the investment, the fund would own:

(1) any combination of obligations of any one political subdivision, corporation or other single issuing entity in excess of 5 percent of Fund assets at cost. This paragraph does not apply to general obligations of the United States or the Dominion of Canada or of the government; or

(2) obligations of the Dominion of Canada, together with its political subdivisions and corporations organized under its law or the law of its provinces in excess of 10 percent of fund assets at cost; or

(3) obligations or other investments issued or guaranteed by the government in excess of 17.5 percent of Fund assets at cost; provided, however, that this limitation does not apply to the obligations or other investments that are unconditionally guaranteed as to principal and interest by, or supported by lease assignment from, another entity whose principal business is outside of American Samoa.

(h) The Board may engage one or more financial institutions as custodians to assume responsibility for the physical’ possession of Fund assets or evidences of assets. The custodian submits reports, accountings, and other information in a form and at such times as requested by the Board. All costs incurred for custodial services are paid by the Fund. The custodian holds all assets for the account of the Fund and acts only upon instructions of the board. Custodians may not be engaged unless they:

(1) have been continuously engaged in rendering pension trust investment services for a period of 10 or more years; and

(2) are organized under the laws of the United States, a state, or a Territory; and

(3) are custodians for not less than 20 corporate, municipal or governmental retirement funds with total assets of not less than $30,000,000.

(i) In order to secure expert advice and counsel, the Board may engage an investment agent who is an investment counselor as qualified by this subsection. The custodian may be engaged as the investment agent. All costs incurred in this connection are paid by the fund. Persons, firms, or corporations may not be eligible for employment as investment agent which acts as principal for its own account or as broker for a client other than the fund in connection with the sale of any security to or the purchase of any security from the Fund. Investment agents may not be engaged unless:

(1) the principal business of the person, firm, or corporation selected by the Board consists of rendering investment supervisory services; i.e., the giving of continuing advice concerning investment of funds on the basis of the individual needs of each client;

(2) the principal control of the person, firm, or corporation rests with individuals who are actively engaged in the business;

(3) the person, firm, or corporation and its predecessors have been continuously engaged in the business for a period of 10 or more years;

(4) the person, firm, or corporation is registered as an investment advisor under United States law;

(5) the contract between the Board and the investment agent is of no specific duration and is voidable at any time by either party; and

(6) the person, firm, or corporation certifies, in writing, to the Board, that the assets under its direct investment supervision are in excess of $30,000.000. The Board establishes and may from time to time change operating arrangements with the investment agent in order to facilitate efficient management and timely -investment action. Investment may not be made unless in the opinion of the investment agent it is an appropriate investment for the Fund and is an authorized investment, or in the absence of that opinion, unless preceded by a resolution of the Board directing the investment.

7.1444.3 Loans to the American Samoa Government.


(a) In accordance with the provisions of section 7.1444(g)(3), which limits any investment in obligations or other instruments issued or guaranteed by the government to no more than ten percent of Fund assets at cost, and in addition to section 7.1444.2, which authorized borrowing by the government of five million dollars ($5,000,000), the Fund is authorized to lend to the American Samoa Government and the American Samoa Government is authorized to borrow from the Retirement Fund the sum of thirteen million dollars ($13,000,000) on the following conditions:

(1) interest on the loan would be set at a rate equal to the then current market rate of United States Government bonds or notes of similar term;

(2) interest and principal payments on such loan would be amortized over a ten-year term and payments made quarterly;

(3) repayment of the loan would be guaranteed and paid for, directly to the fund, by earmarked revenue measures passed by the Legislature and approved by the Governor in installments as required by paragraph (2) above, or as agreed upon by the board of trustees and the government;

(4) collateral, in the form of a pledge of specific real property with a marketable commercial value equal to the amount of the obligation must be furnished to guarantee the ultimate satisfaction of any such obligation; and

(5) other terms and conditions as determined jointly by the trustees of the fund and the government.

(b) The loan proceeds shall be placed in an earmarked fund and used exclusively for the following purposes and in the following priority:

(1) fund payroll for Fiscal Year 1998 for government employees, $4,500,000;

(2) pay individual tax refund, $3,500,000; and

(3) pay government’s accounts payables to vendors, $5,000,000.

Funds from the said loan proceeds that remain unexpended on October 1, 1998, in any one of the three categories above shall not be expended for any other purpose unless resubmitted to the Legislature for further appropriation.

(c) Employees of the government will be restored to and guaranteed a minimum 40-hour work week.

7.1444.4 Credit facility authorization—Assistance—American Samoa Medical Center Authority.


(a) In accordance with the provisions of section 7.1444(g)(3), which limits any investment in obligations or other instruments issued or guaranteed by the government to no more than ten percent of Fund assets at cost, the Governor, on behalf of the American Samoa Government (ASG), and the Board of Directors of the American Samoa Government Employees Retirement Fund (ASGERF) are authorized to enter into a credit facility whereby, the ASGERF will lend and ASG will borrow an amount of $10,000,000.

(b) The Governor, the Treasurer and the Chief Financial Officer for the American Samoa Medical Center are authorized to negotiate the terms of the credit, including an interest rate, repayment terms and such other terms and conditions as may be required to obtain the credit facility, except that the interest rate must be tied to the current actuarial rate of return and the interest rate shall not be less than 8% per annum. The Governor, the Treasurer and the Chief Financial Officer for the American Samoa Medical Center and the ASGERF Board are further authorized to execute all instruments and documents necessary to conclude the transaction, including promissory notes which evidence indebtedness of ASG. The Governor is authorized to pledge the full faith and credit of ASG as well as to provide collateral as required by the ASGERF Board to secure the loan.

(c) The loan proceeds shall be placed in an earmarked fund and used exclusively for the following purposes and in the following priority:

(1) debts, obligations and payables accumulated and owing to appropriate American Samoa Medical Center Authority (ASMCA) vendors, amounts not to exceed:

(A) Contingent—Liabilities

(B) Contingent—Liabilities Penalty & Interest

Total $1,800,000

(C) Vendor—Liabilities:

(i) SRW Industries

(ii) SPHI (Pharmacy consultant)

(iii) HPMR (Third party off-island Administrator)

(iv) KPMG, LLP 2003-2005 Audit fees

(v) ASPA

Total Liabilities $5,000,000

Total expenditures $6,800,000

(2) Continuing Operation of ASMCA $1,700,000

(3) Matching funds $1,500,000

Total $10,000,000

(d) $1,700,000 shall be used by ASMCA for the following specific purposes:

(1) Medicaid/SCHIP Local Match and Medical and Diagnostic Equipment:

(A) Beds; Ultrasound (Cardiology); Incubator; Pulse Oximeters; Gurneys; Patient Monitors; Examination Table; Operating Microscope; Tracoustics exam room; Electric exam table; Exam treatment chair; Floor unit; Zeiss Slit lamp; Visual field analyzer; Patient monitoring system; Chemistry analyzer; Birthing beds; Infant warmer system; Surgical Table; Infusion pumps; Autopsy table & sink (& installation); Blood pumps; Arterial Blood Gas machine; Neonatal monitors; C-arm extension; Double surgical tourniquet; Dual infusion pump; Cauterizing machine; Cysto table; Shea drill; Patient transport tables; Heater probe; Gastronommic scope; Steris system; Instrument washer; Portable cauterizing machine; Procedure table; Auditory exam table; Hand held dopplers; Baby cribs; Ultrasound simulation machine; Large whirlpool; Blood gas analyzers; Compact pasteurmatic machine; Electrocautery machine.

Total Expenditures $1,200,000

(2) ASMCA Fiscal Year 2008 Budget $ 500,000

Total $1,700,000

(e) The Governor, the Treasurer and the Chief Financial Officer for the American Samoa Medical Center shall be authorized to expend proceeds of the loan to satisfy only the debts, obligations and payables accumulated and owing to ASMCA vendors as provided for in 7.1444.4(c)(1)(A)-(C) above and any surplus or remaining funds shall be utilized for the following specific purposes, in descending order of priority:

(1) purchasing diagnostic equipment;

(2) purchasing treatment equipment;

(3) paying for capital improvement projects, excluding housing projects; and equipment and continuing operation of ASMCA shall be provided directly to ASMCA and a full accounting of the said expenditures shall be made by ASMCA to Governor and the Legislature with full supporting documentation. The ASMCA shall enter into a fiscal and operations reform plan with ASG, which shall be approved by the Governor, whereby ASMCA will implement procedures to increase its revenues, reduce its expenditures, achieve a balanced budget and improve the operations of ASMCA (“ASMCA Fiscal and Operations Reform Plan”). The Plan shall be submitted within six (6) months of the date of the loan.

7.1444.5 Loan to American Samoa Government—Renovations of Capital Improvements and Projects.


(a) In accordance with the provisions of section 7.1444(g)(3), which limits any investment in obligations or other instruments issued or guaranteed by the government to no more than seventeen and one-half percent of Fund assets at cost, the Governor, on behalf of the American Samoa Government (ASG), and the Board of Directors of the American Samoa Government Employees’ Retirement Fund (ASGERF) are authorized to enter into a loan agreement whereby the ASGERF will lend and ASG will borrow an amount not to exceed $20,000,000.

(b) The Governor is authorized to utilize the $20,000,000 loan amount in financing the costs of acquiring, improving, equipping or renovating all or a portion of the following capital projects: harbor dredging projects in Tutuila and Manu’a, port office/fire department buildings, port tug boat, KVZK antennae, customs bond warehouse, executive office building-annex (Territorial Energy Office, Election Office and the Office of Protection and Advocacy for the Disable), executive office building-tax office extension, executive office building-roof, territorial registrar’s office, library extension, immigration office building, procurement warehouse, airport hangar, Airport terminal and jet-way, seawalls, animal pound and veterinary clinic, Fono building, funding the Pacific Arts Festival, fiber optic cable, Lee Auditorium, stream realignment, bridge and soil stabilization/retaining wall, purchase of ten school buses, capital projects for the American Samoa Districts, and repairs to and refurbishment of the MV Sili. Unless a specific amount is appropriated for a particular project, improvement or acquisition, the Governor shall determine the application of available loan proceeds as between the various improvements set forth in this section (the “Improvements”) so as to accomplish, as nearly as may be, all of such Improvements. If an amount is specifically appropriated for an Improvement, said amount shall act as a ceiling for expenditures on that particular Improvement. If the Governor shall determine that it has become impractical to accomplish any of such Improvements or portions thereof for any reason, including changed conditions, lack of funding or costs substantially in excess of those estimated, the Governor shall not be required to finance all of such Improvements. Any remaining proceeds of the loan amount may be used to finance additional capital projects as approved by the Legislature.

(c) Such loan shall be general obligation of American Samoa Government and the Governor is authorized to pledge the full faith and credit of American Samoa Government to the full and prompt payment of the principal of and interest on such loan. The Governor, and/or his designee(s), are authorized to negotiate the terms of the loan, including an interest rate, repayment terms and such other terms and conditions as may be required, except that the interest rate shall be fixed at seven and one-half percent (7.5%). The Governor and the ASGERF Board are further authorized to execute all instruments and documents necessary to conclude the transaction, including promissory notes which evidence the indebtedness of ASG. The Governor is authorized to pledge the Full Faith and Credit of ASG as well as to provide collateral as required by the ASGERF Board to secure the loan.

(d) Interest and principal payments on the loan authorized in this section shall be amortized over a ten-year term and payments made quarterly.

(e) There is appropriated such sums from the Government’s general funds necessary for repayment of the loan authorized in this section, in order to finance the costs of acquiring, improving, equipping or renovating all or a portion of the following capital projects: harbor dredging projects in Tutuila and Manu’a, port office/fire department buildings, port tug boat, KVZK antennae, customs bond warehouse, executive office building-annex (Territorial Energy Office, Election Office and the Office of Protection and Advocacy for the Disabled), executive office building-tax office extension, executive office building-roof, territorial registrar’s office, library extension, immigration office building, procurement warehouse, airport hangar, Airport terminal and jet-way, seawalls, animal pound and veterinary clinic, Fono building, for funding the Pacific Arts Festival, fiber optic cable, Lee Auditorium, stream realignment, bridge and soil stabilization/retaining wall, purchase of ten school buses, capital projects for the American Samoa Districts, and repairs to and refurbishment of the MV Sili.

(f) Funds shall be made available from the following sources as identified below, for repayment of the loan authorized in this section to finance the costs of acquiring, improving, equipping or renovating all or a portion of the following capital projects: harbor dredging projects in Tutuila and Manu’a, port office/fire department buildings, port tug boat, KVZK antennae, customs bond warehouse, executive office building-annex (Territorial Energy Office, Election Office and the Office of Protection and Advocacy for the Disabled), executive office building-tax office extension, executive office building-roof, territorial registrar’s office, library extension, immigration office building, procurement warehouse, airport hangar, Airport terminal and jet-way, seawalls, animal pound and veterinary clinic, Fono building, for funding the Pacific Arts Festival, fiber optic cable, Lee Auditorium, stream realignment, bridge and soil stabilization/retaining wall, purchase of ten school buses, capital projects for the American Samoa Districts, and repairs to and refurbishment of the MV Sili: (1) Forty percent (40%) of the excise taxes collected on beer and malt extracts as imposed pursuant to A.S.C.A., section 11.1002(a)(1)(A).

(2) Twelve and one-half percent (12.5%) of the excise taxes collected on alcoholic beverages as imposed pursuant to A.S.C.A., Section 11.1002(a)(1)(B).

(3) Twenty percent (20%) of the excise taxes collected on tobacco products as imposed pursuant to A.S.C.A., section 11.1002(a)(1)(C).

(4) All of the revenues collected from the Customs Entry Declaration Forms Processing Fee as imposed pursuant to A.S.C.A., section 27.1014(a)(5).

7.1445 Conflicts of interest—Prohibited acts.


A member or an employee of the Board may not have any direct or indirect interest in the income, gains or profits on any investment made by the Board, or receive any pay or emolument for services in connection with any investment made by the Board. A member or an employee of the Board or an agent engaged by the Board may not become an endorser or surety or in any manner an obligor of investment made by the fund or for money loaned by or borrowed from the Fund, nor may the members, employees, or agents be held liable for actions taken in good faith and in performance of their duties. Participation as a member of the Fund is not construed to include interest, pay, or emolument within the meaning of this section.

7.1446 Accounts and records.


An adequate system of accounts and records shall be established and maintained for the Fund. It shall fully reflect the requirements of the provisions of this chapter, and shall be integrated, to the extent possible, with the accounts, records and procedures of the government, to the end that the same shall operate most effectively and at minimum expense, and that duplication of records and accounts may be avoided.

7.1447 Costs and expenses.


The costs and expenses of the administration of the Fund, including any custodial and audit fees incurred in connection with the financial operations of the Fund are paid by the Fund.

7.1448 Actuarial surveys and valuations of the fund.


Every 5 years an actuarial survey and investigation shall be made of the operating experience of the fund, including a study of the rates of mortality, disability, retirement and separations, and of other essential factors relating to the operations of the Fund. The survey also provides for a verification or redetermination of the rates of contribution by the government. At least once in each 5-year period between surveys, an actuarial valuation of the Fund is made showing the status of the fund and providing a verification or a redetermination of the rates of contribution by the government. At least once each year the Board shall obtain an actuarial opinion providing a verification or a redetermination of the rates of contribution by the government. The Board shall obtain and provide to the Governor and the Legislature an actuarial opinion of the cost of any proposed amendments affecting the operation of the Fund. The costs of the surveys, valuations, and opinions are paid by the Fund.

7.1448.1 Administrative costs—Procedures for payment.


All costs incurred to administer the Fund pursuant to title 7, chapter 14 will be approved by the Board, prior to payment and will be paid by the Fund.

7.1449 False representation—Penalty.


(a) A person who knowingly makes any false statement, or falsifies, or permits to be falsified, any record or records of the Fund in any attempt to defraud the Fund, shall be sentenced as for a class D felony.

(b) In addition to the penalty in subsection (a), the government has a right to recover any payments made as the result of false representation.