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GERS Comes Up Just Short in Hiking Contribution Rates

The future solvency of the V.I. Government Employees Retirement System continued to reign as a top priority as the GERS board met in session Monday on St. Thomas.

When new business arose, the first item on the agenda came at the request of board member Edgar Ross. He wanted to enact certain recommendations made from a previous board retreat last year that would increase the amount of contributions for Tier 1 employees effective Jan. 1, 2014.

To only raise the amount on Tier 1 employees was determined after much discussion and an advisement by legal counsel that Tier 1 was all the legal authority GERS had the authority to change itself. Tier 2 employee contribution changes would have to come by way of the legislature and governor.

Board member Edgar Ross appeared annoyed at government inaction, especially as it pertained to certain GERS recommendations already made that would increase specific contribution rates for both the government and employees and keep the system solvent in about a decade, which is when it is estimated the system will go broke.

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“We as a board are not doing what we should be doing. We’re hoping that the legislature and governor make fixes to the system so that in less than ten years it doesn’t go belly up. I put this on the agenda because the legislature with the approval of the governor gave this board certain authority to make changes to the system that we believed would help the system,” Ross said.

“I also put it on the agenda because as fiduciaries of the system it is our obligation to do what is necessary to help the system survive in a stable environment.”

Ross added later, “We shouldn’t wait for someone to fix the problems when we have the ability to at least fix part of the problem ourselves. “

After lengthy debate and many points of clarification and questions by board members, Administrator Austin Nibbs advised differently, at one point saying even if the board was going to raise rates it should have given Government House a heads-up first.

“I think it will just cause more disruption and stress…a lot of confusion,” Nibbs said.

“We are in a quandary. I personally feel we should wait. Let’s see what they (the legislature) do,” he said. “We have a three percent increase in the rate over three years and the task force knocked it down to two percent so right there we have a conflict…What I’m saying is they’re (the legislature) not going to do something because there is a conflict between what we recommended and what the task force says.”

Ross contended, “I’m trying to stop the bleeding now. Cut it off now and let’s move forward.”

“I understand what the Judge (Ross) is saying and I agree in principle,” Nibbs replied. “But there are a lot of other things you need to think about.”

Ross’s motion would eventually come up just short, even with the support of board members Raymond James and Dr. Wilbur Callender. That’s because voting against the measure were Board Chairman Vincent Liger and members Leona Smith and Carol Callwood, and with board member Desmond Maynard abstaining, one more vote in support of Ross’s motion was necessary for passage.

When the treasurer’s report came up and the number’s were released through the first month of the fiscal year for 2014, the net cash deficit GERS was facing totaled $12,493,308. The good news in that number was that a year ago, the deficit stood at $15,326,000.

In one other bright spot, Nibbs reported that the annual payment of the V.I. Lottery to GERS would take place on Nov. 22 in the amount of $1,091,093.91, and that 6,721 retirees and pensioners would then be eligible for a gross amount payment of $162.34 each before taxes.

“I’m a sure there are a lot here receiving it (the payment), so, thanks from the V.I. Lottery,” Nibbs said.

His statement later about the V.I. Lottery trying to amend existing legislation as to how its payments are made to GERS sums up perfectly the challenges GERS is facing at present.

Of any future lottery payments to the GERS, Nibbs said, “I don’t know what’s going to happen next year.”

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