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Thursday, August 11, 2022
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GERS Trust Fund Still Evaporating

Despite decent market returns, the V.I. Government Employees Retirement System’s trust fund continues to shrink because GERS is forced to sell off its investments to make current pension payments, staff said at the GERS Governing Board’s regular monthly meeting Monday on St. Croix.

"We ended the month with about a billion in the trust fund," GERS investment officer Bruce Thomas told the board Monday. "We do plan to withdraw about $17.5 million in April," he said, itemizing which funds would be sold to generate cash.

While the return on investments "is continuing to rise,” Thomas said, showing charts of GERS’ financial trends. “Over time, net assets are in decline,” he said.

A 2011 federal audit warned that without immediate, sharp increases in employer and employee contributions, GERS would stop being able to pay full benefits in about 14 years. Early retirement incentives and layoffs have reduced the government payroll while increasing the number of pensioners, reducing the amount of time before GERS goes bankrupt.

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While some reforms were legislated in 2005, they were insufficient, were not implemented at the time, and have only been partly implemented since then. Meanwhile, John deJongh Jr. said in late January that a GERS task force put together by Government House will propose a comprehensive solution sometime in the upcoming months.

Direct deposit of some retirees’ pension checks were delayed by as much as one day this month, due to a glitch with one of the banks involved, GERS Administrator Austin Nibbs told the board. As he has previously, Nibbs said GERS made payments to the banks and provided them with the list of recipients in advance of the banks’ deadline, emphasizing GERS "followed all required protocol," as he recapped what payments were made when.

Asked what caused the problem, Nibbs said he did not want to cast blame on any of the parties because they all needed to work together going forward, and that the situation was resolved. Pressed for an explanation, Nibbs reiterated that GERS had made the payments in time.

"The problem was Banco (Popular) did not pick up the file in time for processing," Nibbs said, adding that both GERS and Banco Popular had put in procedures "to prevent it from happening again."

The board briefly discussed proposed changes to the employer and employee contributions to GERS for employees of the V.I. judiciary.

Board member Edgar Ross said he wanted time to go through the proposed changes more thoroughly before debating them in a board meeting and the topic was tabled until the next meeting.

The board took no actions. After regular business, the board went into executive session. The meeting was suspended for lack of a quorum and did not reconvene in open session to ratify any decisions made in executive session.

Present were Ross, Board Chairman Raymond James, Carver Farrow, Leona Smith, Vincent Liger and Desmond Maynard. Wilbur Callendar was absent.

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Despite decent market returns, the V.I. Government Employees Retirement System's trust fund continues to shrink because GERS is forced to sell off its investments to make current pension payments, staff said at the GERS Governing Board's regular monthly meeting Monday on St. Croix.

"We ended the month with about a billion in the trust fund," GERS investment officer Bruce Thomas told the board Monday. "We do plan to withdraw about $17.5 million in April," he said, itemizing which funds would be sold to generate cash.

While the return on investments "is continuing to rise,” Thomas said, showing charts of GERS' financial trends. “Over time, net assets are in decline,” he said.

A 2011 federal audit warned that without immediate, sharp increases in employer and employee contributions, GERS would stop being able to pay full benefits in about 14 years. Early retirement incentives and layoffs have reduced the government payroll while increasing the number of pensioners, reducing the amount of time before GERS goes bankrupt.

While some reforms were legislated in 2005, they were insufficient, were not implemented at the time, and have only been partly implemented since then. Meanwhile, John deJongh Jr. said in late January that a GERS task force put together by Government House will propose a comprehensive solution sometime in the upcoming months.

Direct deposit of some retirees' pension checks were delayed by as much as one day this month, due to a glitch with one of the banks involved, GERS Administrator Austin Nibbs told the board. As he has previously, Nibbs said GERS made payments to the banks and provided them with the list of recipients in advance of the banks' deadline, emphasizing GERS "followed all required protocol," as he recapped what payments were made when.

Asked what caused the problem, Nibbs said he did not want to cast blame on any of the parties because they all needed to work together going forward, and that the situation was resolved. Pressed for an explanation, Nibbs reiterated that GERS had made the payments in time.

"The problem was Banco (Popular) did not pick up the file in time for processing," Nibbs said, adding that both GERS and Banco Popular had put in procedures "to prevent it from happening again."

The board briefly discussed proposed changes to the employer and employee contributions to GERS for employees of the V.I. judiciary.

Board member Edgar Ross said he wanted time to go through the proposed changes more thoroughly before debating them in a board meeting and the topic was tabled until the next meeting.

The board took no actions. After regular business, the board went into executive session. The meeting was suspended for lack of a quorum and did not reconvene in open session to ratify any decisions made in executive session.

Present were Ross, Board Chairman Raymond James, Carver Farrow, Leona Smith, Vincent Liger and Desmond Maynard. Wilbur Callendar was absent.