Position Statement on Act Number 6571
Our organization, Generation Now!, Inc., has organized to provide a voice for the young people who are currently part of the working class here in the Virgin Islands. As such, we have resolved to oppose those public policies that are negatively impacting those Virgin Islanders that we seek to advocate for. One such issue is the change made earlier this year to the retirement laws by Act Number 6571. This change creates an opportunity for individuals retired from government service employment to return to full-time government service employment while continuing to collect full retirement benefits, for a period of up to three years. This practice has been dubbed "double-dipping". Our opposition to this law is based on the following:
Worsening the Fiscal Crisis
The Government of the Virgin Islands is currently in the midst of a fiscal crisis. A main strategy in resolving the crisis has been the reduction of payroll expenses. The government has enforced a hiring freeze over the last several years and is currently recommending a reduction to 36-hour workweeks for government employees. Past fiscal recovery strategies have included early retirement incentive programs. The change in the law is contradictory to these strategies for reducing the government's payroll. The law effectively offers an incentive for individuals to return from retirement by presenting the prospect of continuing to collect retirement benefits while employed full time.
Burdens Both the Treasury and the Retirement System
Allowing individuals to "double dip" places a burden on both the government's treasury and the Government Employees' Retirement System (GERS) concurrently. Both entities become financially obligated to the individual for a period of three years. Under the current fiscal condition of the government, GERS is facing a substantial "unfunded liability" and the government is having considerable difficulty meeting its payroll obligations. Typically, an individual is either retired from government service or is actively employed in government service. The change in law creates a mechanism by which individuals can enjoy the benefits of both statuses without penalty for three years.
Leaves Retirement System Open for Politically Motivated Abuse
The change in law creates a loophole that can be exploited to reward political supporters without penalty and to the detriment of GERS. The change allows individuals to re-retire at a retirement annuity greater than their original annuity as long as the individual is reemployed over the three-year period at a salary greater than their original salary. This three-year period, as established by the change in the law, conveniently coincides with the number of years necessary to determine an individual's average compensation by the GERS, and thereby, the level of retirement annuity. Therefore, an individual can be brought out of retirement and allowed to work for three years at a higher salary, while continuing to collect retirement benefits, and then re-retire at a higher retirement annuity. An excellent means of promoting political cronyism.
Creates Obstacles for Current and Potential Employees
The change in law creates additional obstacles to Virgin Islanders seeking to make meaningful contributions of their talent and skills to the Government of the Virgin Islands. By encouraging retirees to return to fill vacancies, the law makes it difficult for other Virgin Islanders to find employment opportunities within the government. This further exacerbates the unemployment problems within the territory. The law also potentially hinders the upward mobility and career advancement of Virgin Islanders currently employed by the government. The practice of rehiring retirees to occupy policy-making positions stifles innovativeness and creativity. It delays the introduction of "fresh minds" to positions of leadership and influence.
Arguments for Change Were Weak
The proponents of the change in the law cite a reluctance to "cast aside" individuals who still have knowledge and wisdom to share. However, this argument is weak justification for a law that creates more harm than good. Firstly, retirees are free to contribute after retirement to the community and to the government. It is not necessary to be placed on the government's payroll in order to contribute your knowledge and wisdom. Secondly, government employees truly interested in sharing their knowledge and wisdom have the opportunity to coach and mentor their potential successors prior to retirement. Finally, although we have created a great tool to avoid "casting aside" the knowledge and wisdom of retirees, the community has done nothing to avoid casting aside the knowledge, expertise, and energy that many other Virgin Islanders have to offer. This law assumes that there are not enough talented Virgin Islanders to replace the knowledge loss through retirement. This assumption is untrue. What is missing is an effective mechanism for tapping into this talent.
Generation Now! has several recommendations and suggestions to rectify the negative impacts of this law and to resolve the concerns that brought about its passing:
— Firstly, repeal the change in the law. Our contention is that an employee should be classified as being retired or actively employed, not both. Anyone wishing to leave retirement should be made to forfeit their pension payments after 75 days as the law previously required. The "double-dipping" plan can, however, be used as an incentive to bolster those public service professions where recruiting has been poor, such as teachers, nurses, librarians, etc. This exception should not serve as an open loophole in the law and those professions should be specifically identified based on historical need. In any case, the "double-dipping" plan should not apply to all Government employees.
— Secondly, the Government of the Virgin Islands should formally adopt a succession-planning program to ensure that there is an adequate transfer of knowledge before senior employees retire.
— Thirdly, retirees should be encouraged to take their services to the private sector. This can particularly be accomplished through entrepreneurial ventures. Workshops can be sponsored to train retirees or prospective retirees on how to go about business ownership. Retirees should also be encouraged to assist community-based, non-profit organizations in need of staff employees or volunteers.
— Finally, in the event that it is necessary to bring in retired employees to train current staff or to provide specialized knowledge, it should be done on a one-time contractual basis. The retiree should be hired as a private consultant and the period of the contract should only be sufficient to allow for proper training of the current staff. Once the staff has been trained, the contract should be terminated.
Generation Now! is opposed to the change in law that allows for the concurrent payment of retirement benefits and employment salary. We believe that this change in law upsets the employment balance, places an unnecessary hardship on the Government Employees Retirement System and denies opportunities to other Virgin Islanders for employment and career advancement. It is our desire to have individuals who have enjoyed full careers as government service employees to facilitate the upward mobility and professional development of other employees through a transfer of knowledge, instead of continuing to compete for opportunities in the government service workforce with those employees.
Chair, Committee on Public Policy
Position Statement – Act Number 6571
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