May 25, 2006 – Taking care of the more than $1 billion unfunded liability is a top priority for Willis Todmann, acting administrator of the Government Employees Retirement System.
Up for confirmation as GERS administrator, Todmann also told senators at a Rules and Judiciary Committee meeting Thursday that he would be looking at upgrading the agency's computer system, establishing a cost-of-living adjustment for retirees over the age of 60 and completing the construction of a new GERS headquarters in St. Croix.
During the meeting, Todmann also said GERS would be focusing on implementing new initiatives – such as a voluntary program to help government employees earning over $65,000 annually to invest some of their money – and would be considering delving into new investment opportunities in the future.
He said that while GERS has had a positive rate of return on its current investments, the system still needs to bring in revenues to assist in paying retirees' benefit packages.
Todmann explained that the GERS reform bill signed into law by Gov. Charles W. Turnbull last year gives the agency an opportunity to invest 10 percent of its earnings in alternative investment opportunities – like hedge funds, HMOs and real estate.
Having retirees receive their annuity payments through direct deposit is also something GERS is looking at, Todmann said. He explained that currently 40 percent of the system's members are using the system, which can help to safeguard against check and bank fraud. "Members would also have access to their money immediately in case of a disaster," he said. "So we're definitely looking to do this."
While Todmann further stated that GERS is currently developing a plan to pay off the unfunded liability, he also had some suggestions for senators. He said that the Legislature should look at inserting an annual appropriation into the government's operating budget, which could help take care of the debt, and should also set aside money in a "rainy day" fund.
He said that an annual appropriation of $5 million should also be made for a cost-of-living allowance (COLA) for retirees over the age of 60. Todmann explained that while there is nothing in the V.I. Code that provides for an annual COLA, legislative appropriations had been made in the past for an increase.
"After a period of years, however, these appropriations ceased, and the system was left to provide for the increases," Todmann said, adding that that the lack of funding provided by the government for the COLA added to the unfunded liability. "This is a matter of social responsibility that needs to be addressed, and the burden which falls upon GERS should be removed," he said.
Impressed by Todmann's presentation, senators unanimously voted to move his nomination onto the full Legislative body for a final vote.
The nomination of Carmen Wesselhoft to the V.I. Housing Finance Authority Board also sailed through the Rules Committee Thursday.
Wesselhoft said her primary goal would be to help establish affordable housing complexes for St. John residents, who are being affected by the rising price of real estate on the island.
All committee members were present during Thursday's meeting, along with noncommittee member Sen. Liston Davis.
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