Any government retiree who has not yet worried about future pension payments; the time to start worrying might be now. The territorial government, on the verge of financial collapse, has apparently picked the Government Employee Retirement System (GERS) as its first victim.
Austin L. Nibbs, GERS administrator, pointed out to the GERS Board of Trustees meeting Tuesday night, what he called “a very serious issue.”
He said that the central government has not been paying its employee or employer contributions to GERS since December. He told the Source during a break in the meeting that the government, by law, is supposed to make the payments to GERS within 10 days of a payday. There have been three paydays with no payments forthcoming.
Nibbs pointed to a line in the treasurer’s report that showed that GERS had deposited $1.4 million in employee contributions in 2017, but last year in January it had deposited $5.6 million. Nibbs asked, “What is the government doing with the employee’s contributions.” (When Nibbs refers to central government that does not include semi-autonomous agencies such as the Water and Power Authority.)
Trustee Carol Callwood said, “I am not sure what the intent of the administration is, but it must be stated that this cannot continue.” She added, “There might be method to this madness, but I don’t see it.”
Board chairman Wilbur Callender suggested that a reminder be sent to the administration about the funds due.
But not everyone agreed.
“The time for reminders is past.” Deborah Christopher, acting president of St. Croix Retirement Group, told the Source. “They need to be taken to court. They are breaking the law.”
Callwood appeared to agree, saying, “It is not a question of what they should do; it is a question of what they need to do.”
The failure of the central government to pay employee and employer contributions is not just bad news for retirees but also for present government employees who may find it difficult to get any pension payments when they retire.
Retirees in recent years have had trouble getting their pension payments started because of missing government contributions.
However, those missing payments were random caused by such things as employees changing departments or miscalculations when there was an increase in deductions. Usually those missed contribution were not astronomical. (This writer retired from the government with a couple thousand owed in employee and employer contributions. These deficits were rectified within three months.)
The legislature had set aside money in 2016 to rectify missed contributions and it helped retirees in early 2016. However, retirees in late 2016 have had more difficulty because those funds were exhausted. Nibbs told the trustees that GERS has not had a payment for missing contributions “for four or five months.”
Bruce Thomas, investment officer for GERS, was matter of fact about the problem in his report to the trustees. He said that without the incoming funds from the central government, GERS needed to liquidate assets to bring its on-hand capital up from $20 million to $100 million. He said that not only would this help GERS meet it payments when revenue from the central government was not coming, but it would also protect GERS in case of a market crash. He also recommended strategy on withdrawing from the market as “we no longer have a long-term perspective” as “we approach the date of ruin for the system.”
If all that bad news was not enough, Nibbs reported to the board that there had been a cyber-attack on the system and the FBI was investigating it.
The trustees adjourned into executive session to discuss the sale of Carambola. They put off until after the executive session consideration of a request from Carambola for $575,000 in funds.