Employees in the territory might be working a little longer if the Virgin Island’s retirement system gets the Senate to approve a set of recommendations meant to counter the impact of recent government layoffs.
Government Employees Retirement System (GERS) board members met in an emergency meeting Tuesday night to discuss the realities of the situation. At this point, the government is facing a $67.5 million deficit, and to make it up, Gov. John deJongh Jr. recently announced that as many as 1,000 employees could be dismissed by the end of January.
A set of 140 part-time employees were dismissed on Dec. 30, while a second wave of approximately 350 employees were dismissed last week. At Tuesday’s board meeting, GERS Administrator Austin Nibbs said that losing 350 employees, at an average of $36,000, will add up to a $3.2 million annual loss in contributions and an additional $267,750 monthly deficit for GERS.
Senators have said they are working on a plan to stop two more waves of dismissals, but if nothing happens, and the entire 1,000 employees are let go, GERS will be down $9.1 million, Nibbs said.
During the meeting, board members were concerned that raising the retirement or contribution rates would be too much for government employees to handle at this time. Nibbs said in an interview Wednesday, that without a solid plan, GERS would have no other choice.
“We are recommending amendments to the Legislature for some changes, such as establishing a retirement age of 62,” Nibbs said. “We might not have an alternative. We’re seeing that a lot of people are retiring younger, but if this happens, we will not pay their annuity until they are 62. That is what is being done with Social Security – you will not get your payments until you reach a certain age.”
Nibbs said that GERS is also recommending that the base salary for annuity payments be based on an employee’s career average, rather than what they earned during their last five years.
“We’re thinking about increasing the rates,” Nibbs said. “Our actuary has indicated to us that it takes 43 percent of payrolls for the system to be viable. We’re only collecting on average 25.5 percent.”
Nibbs also said that the government or the Senate is responsible for providing GERS with an alternative revenue stream, but also mentioned the possibility of asking the government to “carve out” a portion of money brought in from Diageo for GERS.
During Tuesday night’s meeting, the board also approved a motion authorizing the GERS Investment Committee to look into whether the system should attempt to bid on delinquent properties being auctioned off by the Lieutenant Governor’s Office.
Present during the Tuesday meeting were board members Wilbur Callender, Carver Farrow, Raymond James, and Edgar Ross.