Strengthening Our Government Employee Retirement System (GERS)

Immediately mitigate and resolve the state of the GERS. Assess and research alternative pension plans to construct innovative ways to address retirement liabilities and to secure viable products for current and future government workers.

Challenges

  • Moody’s downgrade of the GVI Bonds and its impact on the GERS:  Moody’s calculation of the unfunded liability “nearly doubled” from 2009 to 2015. Annual contributions, according to Moody’s, have been consistently far below both the Actuarially Determined Contribution and actual benefits paid.
  • Moody’s downgrade of the GVI Bonds and its impact on the GERS:  Moody’s calculation of the unfunded liability “nearly doubled” from 2009 to 2015. Annual contributions, according to Moody’s, have been consistently far below both the Actuarially Determined Contribution and actual benefits paid.
  • Finding an immediate infusion of funds: Finding a dedicated funding source/revenue stream to supplement the GERS.
  • Years of ignoring a mounting imbalance between the system’s liability and its assets: According to the GERS board itself, the system’s total obligation to its members is more than eight times larger than its total assets. Failure to make timely employer and employee contributions:  The government has consistently been delinquent in making the necessary payments into the GERS system and has failed to contribute the required Actuarially Determined Contributions (ADC), and even employee contributions taken from their paychecks. Not only is this illegal, it puts the GERS system on the path to becoming a Ponzi scheme, with disastrous results not just for system members, but for the entire economy.
  • Impending disastrous economic repercussions: Collapse of the system would take an enormous toll on everyone in the Virgin Islands. A GERS survey last year found that the Territory would lose half or more of its disposable income and prompt many retirees to relocate. Pension deficits matter because underfunded retirement systems can constrain spending for other essential government programs and services, including education and transportation.
  • Addressing longevity concerns: Workers and people generally are living longer lives and thus have longer retirements. This poses various challenges to the retirement system, including an urgent need to incorporate “lifetime income” options that grow the system.

Solutions

The Petrus-Sanes Administration intends to make addressing the GERS situation a key priority. Our Administration will listen to retirees, GERS administrators, and key retirement experts to: 

  • Commit to making full current pension payments and paying down pension debt.
  • Ensure that retirees who have paid into the system receive what the system owes them.
  • Support and implement legislation that will direct a percentage of revenues generated from the upcoming refinery in St. Croix toward the GERS unfunded liability.
  • Implement a 401(k) product option or gradually transfer to a phased-in 401(k)-style defined contribution system or an effective hybrid system.  This has been become an alternative to comprehensive reform for many jurisdictions and reform models that have re-imagined the role of employers.
  • Support the Government Retirees United for Fairness lawsuit by implementing Act 7261.
  • Depoliticize the retirement system, its management and oversight by creating a “soft” employer mandate that would support the ability for the development of an automatic enrollment system for contributions from community-wide employers.
  • Make retirement options and plans more portable and reducing the “cash-out” employee options, thereby reducing the complexity involved in “rolling over” accumulated savings to a new plan and opt-out options.
  • Assess viability of shifting all new and younger workers to a defined contribution system and provide the same option for middle-age and older workers. This would allow workers to retain any pension benefits they have already accrued. Examine whether future retirement contributions might be better served as defined contributions into employees’ private plans.
  • Convene a public-private task force to investigate how the movement towards a new kind of “open” private third-party MEP-Multiple Employer Plan, that allows employers to pool together to offer a single plan to all their workers, might help all retirees.

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