An Economy Dependent, A Portfolio ExposedTalofa Esteemed Members,
American Samoa’s economy is insular, isolated, and heavily dependent on federal assistance and the fishery industry, which are highly susceptible to external shocks. This vulnerability was evident during the COVID-19 pandemic and amid supply chain disruptions from the Russia– Ukraine war. Today, President Trump’s “Liberation Day” tariffs have triggered renewed concerns in our territory due to their potentially significant adverse impact on our economy and pension fund.
As we await the full effects of proposed federal spending cuts on U.S. territories— including American Samoa — we are already witnessing the damaging consequences of the administration’s trade policies, particularly tariffs, on the financial markets. These policies have severely affected pension funds and retirement systems invested in stocks and bonds.
According to data from the Equable Institute, as reported by NCPERS, the 25 largest U.S. state and local pension funds lost a combined $169 billion between April 3 and April 8, 2025. From January 1 through April 8, public equities' losses totaled $248.8 billion, not including declines in fixed income and private asset classes.
The report also notes that public pension funds now face $1.37 trillion in unfunded liabilities, with an average funded ratio of only 80.2%.
As Equable stated, “The financial market shock of the last few days is exactly the kind of negative scenario that fragile pension funds should be concerned about.”
Unfortunately, the ASGERF Board and management have not released investment performance reports for FY2024 or the first half of FY2025 to members and stakeholders.
Nor have they issued any public statement regarding how recent market volatility, exacerbated by tariff policies, has impacted the Fund’s portfolio.
As of September 30, 2024, 87.2% of the Fund’s assets were allocated to the stock and bond markets. It is therefore reasonable to assume the Fund’s value has declined since year-end 2024.
The Fund’s fragile financial condition magnifies this exposure.
As of FY2024, it was only 49% funded — an improvement over the previous year, but still well below sustainability levels. Compounding this, the Fund is owed an estimated $7 to $8 million in outstanding employer or employee contributions. These structural weaknesses raise serious concerns about the Fund's long-term solvency.
Since October 2024, the Board has failed to convene a single meeting, despite clear requirements in the Fund’s By-Laws and statutory mandates. This inaction reflects a troubling belief among some trustees that “meeting with investment managers is the prerogative of the investment advisor.” Such a mindset reduces trustees to passive observers, ceding direct engagement with managers to the advisor.
Consequently, the Board missed a critical opportunity to meet with representatives from two Boston-based firms managing 60% of the Fund’s assets — $124.8 million as of FY2024 — even though trustees attended the NCPERS Pension Funding Forum held in Boston in August 2024.
Trustees must engage directly with investment managers, whether in person or virtually.
First, they are legally obligated to act in the best interests of beneficiaries. Direct engagement demonstrates diligence and prudent oversight.
Second, trustees can ask hard questions and hold managers accountable for performance, fees, and risk.
Third, hearing directly from managers broadens trustees’ perspectives and improves decision-making — something no advisor’s summary can fully substitute. This is a hallmark of sound governance.
Could ASGERF have mitigated the damage from Trump’s tariff policy?
Since 2022, the Board and management, in coordination with the advisor, have revised the Fund’s Investment Policy (IP) and begun implementing a reallocation strategy. In 2023, the Board hired a governance advisory firm that proposed reforms, yet these remain unimplemented.
Later, a second investment consultant was brought on to evaluate the revised IP and the Fund’s current portfolio. In October 2023, the consultant presented a “functional” allocation framework that groups assets by purpose — growth, income, liquidity, and diversification — unlike the current “traditional” framework that categorizes by asset class.
One important takeaway from these consultations was the recommendation to incorporate “uncorrelated” assets — those that behave independently of traditional markets. The Fund’s current advisor supported this addition, which may prove especially valuable during the market turmoil we now face.
A third model — Cash Flow Matching (CFM) — was introduced during the 2024 NCPERS forum. This strategy segments assets into debt (to match benefit payouts) and equity (to grow assets), aiming to immediately improve funded status while reducing the need to liquidate investments to meet benefit obligations.
Yet the Board never evaluated this option due to its suspension of meetings since October 2024.
Had the Board and management actively reviewed these frameworks, consulted with managers and advisors, acted on governance recommendations, and implemented asset reallocation strategies promptly and transparently, the Fund might have withstood — or even avoided — the worst effects of Trump’s trade policies.
A Case Study in Foresight: The Oracle of Omaha
Warren Buffett, known for his prudence, began raising cash positions early in Q2 2024, anticipating the market instability triggered by the tariffs. His Berkshire Hathaway Class B shares returned +27.09% in 2024 and +15% year-to-date as of April 9, 2025.
By contrast, the S&P 500 Index returned +23% in 2024 but had declined (-14%) year-to-date by April 9, 2025.
The lesson is clear: the ASGERF Board must remain vigilant, act urgently, seek continual education (e.g., through NCPERS and NASRA), engage investment managers directly, and respond decisively to professional advice.
Why am I writing these open letters?
Because I care about the Fund's sustainability and the welfare of our government workers and their beneficiaries. I have witnessed how politics, the Samoan culture of deference and respect, and internal culture have influenced Fund operations since 2020 and even more so since joining the Board in early 2022. One or two trustees alone cannot overcome the dominance of a chairman who serves as Senate President, aided by his legal counsel.
These letters are also written for the current administration to notice and hopefully take action. Whether and how they do so remains to be seen.
In the meantime, I appeal to you, the more than 6,000 members of ASGERF, to take a stand. As I have urged, organize, form an association of active and retired members, and seek legal representation. You can demand improved governance and long-term security for your retirement fund through unity.
I’ve paid the price for speaking out. Now, it’s your turn to pick up the baton and move mountains.
This is my final open letter to you. Thank you for listening, and Godspeed.
Fa’afetai tele lava,
Fuiavailili K. Lafaele
(Signed)
Section: OpinionTags: letter to the editor
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