Despite the Government Employees Retirement System’s pending lawsuit against the V.I. government’s early retirement act of 2000, both parties are encouraging government workers with 28-plus years of service to apply for the early out.
At workshops Friday on St. Croix and St. Thomas, Joanne Berry, the Turnbull administration’s personnel director, and GERS staff told eligible government workers that they have until Nov. 18 to apply. The last day of work for anyone choosing to retire under the act is Dec. 18.
"The most important thing to think about at this time is the clock is ticking," Berry told about 75 potential retirees on St. Croix. "If you want to receive incentives, you have to make an application to GERS and file a letter of intent by Nov. 18."
The suit seeks to clarify language in the early retirement act that mandates that GERS allow employees with 28 years of service to buy advance credit through reductions from future retirement payments. GERS, however, argues that allowing employees to retire without their retirement package paid for before leaving the government would have an adverse effect on its retirement reserve fund.
"GERS has a problem with pay as you go," Berry said.
GERS’ suit and Berry agree, though, that early retirees should be allowed to buy their time up front as though they had contributed to the system for 30 years. An example given in a workshop handout said that an employee whose highest salary was $30,000 and who worked 28 years, three months and 18 days – or one year, eight months and 11 days short of 30 years – could buy his or her additional time needed for $3,926.
Even with the question still unanswered about how those with less than 30 years will be able to pay their contributions, Berry said people interested in retiring under the plan should proceed until the court makes a decision.
"We’re suggesting that all of you in the grey area make an application," she said.
Under the retirement plan, only government employees with 30 years of service would be offered a 15 percent to 20 percent salary incentive to retire.
For example, a classified employee with a gross salary of $35,000 would receive a 20 percent incentive of $7,000. An unclassified employee would receive a 15 percent incentive of $5,250. Berry said incentive payments will be paid in a lump sum within 45 days following the workers last day.
The cost of the early retirement act is being covered with $15 million from the government’s $300 million bond sale done last year.
Berry said the act allows only a third of the people who leave the government to be replaced. There are 800 employees who qualify to participate in the program, she said. An exodus of early retirees could save the government as much as $25 million a year, according to some estimates.
Berry did say that teachers, depending on the subject they teach, who opt for the early out can return to the classroom at entry-level salaries and work one year or until a replacement is found and still collect their retirement payments.
Meanwhile, GERS Administrator Lawrence Bryan said both the retirement system and the administration will benefit from having the Territorial Court clarify the act. He stressed that GERS’ biggest concern was in financing the program.
He said it should be fully paid for; if not, "the onus is on the government to provide funding."
"Once we have clarification . . . we’ll proceed with the process of their retirement," Bryan said.
