The government and its pension system have finalized a settlement for an amount lower than previously thought was owed in “missing” contributions for about 250 members who retired between Oct. 1, 2010, and Dec. 31, 2012.
According to financial reports on the Government Employees Retirement System website, the amount owed was approximately $7 million but, according to GERS spokeswoman Lorraine Gumbs-Morton, the final amount was at least $1 million less.
The “missing” contributions were recently discovered when GERS switched over to a new annuity system that would not allow for payments to be made without making sure that any outstanding contributions owed – in this case, owed by the government – are taken care of.
“It isn’t that the government stopped paying – it’s that they were not aware that these contributions were owed,” Gumbs-Morton, explained to the Source Friday. “And our system would not process the payments unless they were in there, so that was when it was discovered that contributions were missing on the part of the employer,” she said.
Though the government has disputed the final amount, the settlement calls for the outstanding amount to come from delinquent property tax collections, with the contributions being paid to GERS in 2016.
According to GERS’ financial reports, there are a few reasons that the contributions were owed, including:
– in prior years, employees coming into the government had a 12-month period where they were not required to be members of the system. Beginning with the 13th month, employee and employer contributions were required based on the law to be remitted, but this did not occur. In some cases, this continued for several years;
– and based on collective bargaining agreement negotiations, GERS members received Notices of Personnel Action based on negotiated salaries going back two to three years. Although, the members were eventually paid those negotiated salaries, no employer contributions were paid retroactive to the effective date of the employees’ NOPAs.
At a recent meeting, GERS board members said they were concerned that they would have to wait two more years to find out if they would even get the money; if the funding stream is not guaranteed, then GERS might have to liquidate more of its portfolio assets in order to pay what is owed, board members said.
The settlement agreement waives the delinquency fees for the government because the government was never billed for the missing contributions, according to GERS officials.
The settlement agreement was approved on a 4-1 vote.
