The V.I. Government Employees Retirement System and V.I. Government remain at odds over a portion of missing employer contributions, leaving pensions for some retiring employees in limbo until a final resolution is reached, GERS Administrator Austin Nibbs told the governing board Thursday.
At issue are both the amount of employer contributions due to GERS, and whether or not employees who worked for a certain number of years but received contributions to GERS – from the government or the employee or both – can have their pension calculated based on their full employment period, without GERS getting full payment.
V.I. law requires GERS to only calculate pension levels based on the time period when both employer and employee contributions were made. The system has allowed retirees to pay missing employee contributions in order to increase their final pension. But the law requires all the contributions be paid, and ultimately that GERS fund pensions on an actuarially sound basis, so that the system can continue to operate into the future.
The Segal Company, which is the GERS actuary, estimated in a June report that as much as $47 million in employer contributions had been potentially due as of Oct. 1, 2011. The central government disputes that total and GERS has been trying to negotiate a settlement for many months.
In August, Gov. John deJongh Jr. proposed a settlement agreement that devotes the balance left in the Special Real Property Tax Receipts Fund after the government has repaid a loan from November 2011 to pay the government’s outstanding contributions to pensions for government employees. Government House estimated that source would be able to contribute about $11 million.
While many of the points of dispute had been worked out, deJongh was insisting that the government would only pay the net amount of missing contributions, and not the lost investment income those contributions would have generated for the system had they been made years earlier, Nibbs said.
"The board needs to determine what we are going to do since the governor stated in our last meeting he is not going to sign it with the lost investment income included," Nibbs said. "I don’t intend to waive that. I can waive penalties and interest, which I did," he said. "I just want to know what to do because members are waiting to retire. … Yesterday I had members calling me, crying," he said.
Board member Edgar Ross argued GERS was legally obligated to get full payment before setting annuity amounts.
"The law states employees can only receive benefits for the time the employer and employee has paid the contribution, so that if the employer or employee has not paid, the employee is only due for when there were dual payments," said Ross, a retired judge.
In the past, some employees were getting full benefits without paying the contributions, and when it was disclosed, "the board directed the system to follow the law," Ross said.
Board member Carol Callwood asked whether there is a possibility of reaching an agreement the next time board members meet with the governor, and suggested if there is no chance, the board may need to reach a conclusion and act on its own.
Nibbs said "the last word was the governor would not accept the lost investment," so an immediate agreement was not likely.
"In all fairness, the government made a slew of payments recently and the majority of the retirees were able to go home. but there are people still in limbo," Nibbs added.
Board member Raymond James said he felt "the parties should be able to sit down and within reason negotiate a settlement that is within the law that we can agree too."
But James added he "agreed with member Callwood," and "if at the end of the day we cannot get the administration to agree to the lost investment income then we have to move away."
The board took no formal action and informally agreed to continue to negotiate with the administration.
In other business, the board approved spending for two renovation projects at Marriott Renaissance Carambola Beach Resort on St. Croix. GERS owns the resort due to its previous owners defaulting on a GERS loan. All expenses in excess of $50,000 require board approval, Nibbs said.
The board unanimously authorized spending up to $106,107 to repave a walking/golf cart path at the resort in concrete instead of asphalt. "It is deteriorating badly," Nibbs said. "If we pave with asphalt, it would be cheaper, but the engineer says concrete would last up to 30 years, while asphalt would have to be repaved every two or three years," Nibbs said. "It may increase the assessed value of the resort too," he said. The board set up by GERS to run Carambola has gotten one estimate of $106,107, but Nibbs said he is asking for two more estimates before committing.
It also unanimously authorized spending as much as $161,615 to renovate the six buildings closest to the waterfront. They were renovated about seven years ago, but have suffered termite damage, rotten wood, damaged screens and other problems since then. "When Marriott came, they looked at it," Nibbs said, suggesting that the repairs may be important to ensure the resort’s good standing with the Marriott brand.
The board also voted to approve the nominations of St. Croix resident Earl Powell and St. Thomas resident Pamela Richards-Samuel to GERS’ Carambola governing board. Voting yea on the two appointments were: Ross, Callwood, Dr. Wilbur Callendar, Leona Smith and Vincent Liger. James was absent at the time of the vote. Desmond Maynard abstained.
