Feb. 27, 2004 – The Government Employees Retirement System has no choice but to seek increased contributions from those on the public payroll in order to remain solvent, its board chair, Raymond James, said on Friday.
"The system cannot continue not receiving additional contributions," James said. If revenues are not increased, he said, GERS will have to keep taking money out of its investment market securities in order to meet its obligations to those persons already retired.
At a meeting this week on St. Thomas, the GERS board provided Senate majority members evidence that the retirement system is facing an unfunded mandate totaling more than $700 million.
"At the current rate, in nine to 13 years, we could find ourselves with a GERS that is practically bankrupt," Sen. Douglas Canton Jr., the majority leader, said on Wednesday following the meeting, held at Palms Court Harbourview Hotel.
James said on Friday that he wants the Legislature to approve an increase in the level of employee contributions into the pension fund. That will cause some financial pain over the short term, he said, but it has to be done.
The lawmakers, he said, need "to focus on reforming the current legislation as it relates to the pension system. There are many things that need to be looked at that are enunciated" in the GERS board's proposal.
Investment income has improved for GERS, as it has for pension funds around the country, James said, but that by itself cannot give the retirement system the financial boost it needs.
Canton on Wednesday termed the closed-door session "a working meeting for senators and their staff for a briefing by the GERS on the status of the GERS, for purposes of the staff doing their further research and to help their respective senators chart a course to deal with the problems."
In addition to the solvency issue, there was discussion at the meeting of pensions for senators and Territorial Court judges, of payouts to current retirees, and of mandated interest payments to individuals withdrawing their contributions from the system before becoming eligible to retire.
The interest matter prompted Sen. Adlah "Foncie" Donastorg, a majority member, to issue a release on Wednesday accusing GERS of ignoring legislation enacted in 2002 calling for the payment of 4 percent interest on contributions refunded to individuals leaving government service prior to retirement. (See :Senator: GERS not paying interest to opt-outs".)
On Thursday, Laurence Bryan, GERS administrator, issued a release stating that the board "fully intends to pay interest on refunds." He said system personnel are compiling membership data "to determine eligible recipients and will forward this information to the system's actuary for a proper determination of the calculation formula." (See "GERS 'compiling data' on pre-retirement refunds".)
Sen. Celestino A. White Sr., a member of the minority bloc, took to the radio airwaves early in the week to chastise both the GERS board and his majority colleagues for discussing the pension matters behind closed doors. He called on the board "to stop allowing the majority in this Legislature to continue to haul them into these private meetings where the members of the legislative majority are trying to have the GERS come up with certain reforms with the retirement system."
White said all government pension fund discussions should take place in public. "I don't mind discussing these things, but they have to be discussed in the sunlight, in the open," he said.
Prior to the meeting, Canton and Sen. Roosevelt David publicly denied White's assertions that the pensions of senators would be discussed.
On Friday, James admitted there were talks about Senate pensions while some senators were excluded from the talks. But he said he did not want to position himself or members of his board between the Senate minority and majority.
"The discussion held at Palms Court was held at the request of Senator [Louis] Hill as part of the Senate majority caucus," James said. "The request came to us in writing, and, just like we have done in the past, we generally honor all requests. We have had more than one discussion with other groups, and this one was done at the request of the Senate majority."
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