74.9 F
Charlotte Amalie
Monday, February 6, 2023
HomeNewsArchivesGERS Taking Past-Due WAPA Pension Contributions From Its Utility Bills

GERS Taking Past-Due WAPA Pension Contributions From Its Utility Bills

The V.I. Government Employee Retirement System has begun withholding its utility payments to the V.I. Water and Power Authority and applying them toward past-due pension contributions, GERS Administrator Austin Nibbs said during a board of trustees meeting Friday.

Last July, GERS Administrator Austin Nibbs raised the matter during a board meeting, saying the system has not received contributions from WAPA for its employees since the Feb. 2 pay period, leaving the authority with $5 million outstanding to GERS. WAPA officials said at the time it has not paid because officials contend they have a credit for some employees who were paying in 10 percent instead of the regular 8 percent.

The two agencies have been debating what is owed and negotiating how to go forward ever since. Since then, WAPA has just about paid down the past due employee-contributions with a series of $500,000 payments, Nibbs said.

GERS has allowed $225,000 in utility bills to accumulate since November, Nibbs said. After that sum is subtracted, WAPA owes $4.7 million, not counting interest and penalties, and $6.8 million with all legally mandated interest and penalties, Nibbs explained after the meeting.

Meanwhile, the terrible fiscal situation at the pension system continues to worsen and it is liquidating its portfolio at an accelerating rate, paying an ever larger amount of current benefits by robbing the trust fund, GERS officials reported at the meeting.

Last September, the U.S. Department of the Interior issued a report calling for large increases in both employer and employee contributions to the pension plan.

With an unfunded liability of more than $1.4 billion, GERS "could default in 14 to 19 years or less," Mary Kendall, DOI’s acting inspector general, wrote in a memo prefacing the report.

Since then, austerity measures have induced hundreds of government employees to retire, decreasing contributions to the plan while increasing pension payments to retirees, which Nibbs said played a major role in the worsening financial figures.

According to the financial report given by GERS Chief Financial Officer Grasilda Dobbins, GERS took in $10.8 million this January, with $4.8 million in employer and $3 million in employee contributions; $2.9 million in loan repayments and several smaller sources of revenue making up the rest. But GERS paid out $22.6 million, bleeding $11.8 million more than it took in for the month. Of that, the overwhelming majority was $18.5 million for retiree pension annuity payments.

By contrast, last January GERS took in $16.4 million and paid out $19.5 million, of which $16.4 million were pension checks, for a much smaller monthly loss of $3.1 million.

"Since last year, annuity payments went from $16 million per month to $18 million per month, and with the layoffs and retirements, I expect that to rise to at least $20 million per month for 2012," Nibbs said.

Nibbs said he is doing what he can "from a cash flow perspective," to try to deal with the situation, and GERS is in the process of negotiating a new line of credit to help it make payments financed in part by interest from its loan programs.

"But it needs to be addressed at a deeper level, as the governor said in his state of the territory address," Nibbs said.

In other business, the trustees voted to continue holding PIMCO bonds for the time being, despite its being downgraded, in hopes that it will rebound. This is the second time GERS has voted to do so, after granting a similar extension in October.

The trustees also voted to terminate a financial management contract with Oechsle International Advisors, and temporarily move the assets held by Oechsle to an index fund at State Street Bank, the pension fund’s institutional custodian, pending distribution to other managers. All votes were unanimous. Present were trustees Carver Farrow, Raymond James, Vincent Liger, Edgar Ross and Leona Smith. Trustee Desmond Maynard was absent.

Print Friendly, PDF & Email
Keeping our community informed is our top priority.
If you have a news tip to share, please call or text us at 340-228-8784.

2 COMMENTS

Support local + independent journalism in the U.S. Virgin Islands

Unlike many news organizations, we haven't put up a paywall – we want to keep our journalism as accessible as we can. Our independent journalism costs time, money and hard work to keep you informed, but we do it because we believe that it matters. We know that informed communities are empowered ones. If you appreciate our reporting and want to help make our future more secure, please consider donating.