Trustee Wants to Prove GERS Investments Aren’t Bad

Nellon Bowry, director of the Office of Management and Budget, discusses the proposed FY 2018 Budget Wednesday with members of the Senate Finance Committee. (Photo by Onaje Simmonds, Legislature of the Virgin Islands 2017 Summer Intern)
2017 file photo of Nellon Bowry (Photo by Onaje Simmonds, Legislature of the Virgin Islands)

Trustee Nellon Bowry defended the V.I. Government Employees Retirement System’s record on return on investments during the board’s meeting Thursday, arguing that when politicians and residents say the problem is GERS’s poor investments they ignore the obvious – GERS pays out much more in annuities than it collects in contributions.

Bowry asked representatives of Meketa Investment Group, who were updating the board during the meeting, whether there were ways to demonstrate that returns on investments were not the problem with the system.

Meketa representatives Gustave Bikkeskakk and Leandro Gestino both said GERS investments had earned more money than 68 other retirement funds of similar size. Bikkesbakk said GERS investments were “very, very strong.” Festino said GERS earning were at the “top of the list” and provided a graph showing that GERS returns were higher than all the others.

Trustee Carol Callwood said everyone had to understand that GERS problems were not of investment but of the need for a cash infusion.

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Bowry said a documented comparison was needed so GERS could say, “Here is the proof.”

According to GERS Administrator Austin Nibbs, 8,708 retirees are now receiving checks from the System. In the last pay day, $10.7 million was sent out. He said, since Oct. 1, $160 million has been sent out to retirees. In that time frame 230 retirees have been added to the payroll while 207 were deleted.

In recent months, expenditures for the retirement system exceeded incoming donations by $5 million a month, which would be dismal news for most retirement systems, but for GERS those numbers have actually seemed like a bright spot.

Callwood said at the board’s meeting that if that income/outgo balance stays that way, “We could survive longer.” Most monthly deficits had been $10 million or more for the months leading up to recent meeting, she said.

Chief Financial Officer Denise Jeremiah indicated the bright spot would not be there long, as the recent months had seen government agencies paying more into the system as they were paying up on arrears, and that is now finished.

Total collections in April 2020 were $19.2 million and disbursement for the month was $24.1 million, with the deficit being only $4.9 million. In 2019 the collection was $15.6 million. Most of the increase in April 2020 collections could be found in the employer contribution, which increased from $7.9 million to $11.1 million.

GERS net deficit so far this fiscal year is $62 million. At this point in 2019 the year-to-date deficit was $43 million. One area it is taking a hit because of COVID-19 are rents it collects from Havensight businesses. In April 2019 it collected more than half a million dollars from those businesses. This year it collected only $19,000. GERS has made some concessions to businesses who rent from it, but businesses are asking for more – full abatement from paying rent until October.

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