Audit shows GERS investment portfolio lost $78 million in 2011
Published: January 30, 2013
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ST. THOMAS - The V.I. Government Employees Retirement System lost $78 million in 2011, according to a preliminary audit report presented to the board Tuesday.
George Willie, a partner at the firm Bert Smith & Co., told the board that while employee and employer contributions into the system increased by more than $6 million compared with the previous year, the retirement benefits paid out increased by $10 million.
A decrease in the valuation of the GERS investment portfolio left the total retirement plan value with a net decrease of $78 million, Willie said.
In 2010, the system saw a net increase of $12.9 million, but in 2011 it lost $78.3 million, he said.
Willie told the board that the 2011 numbers do not take into consideration the massive cutbacks in active government employees made by Gov. John deJongh Jr. in 2012.
"There are issues and I'm quite sure that you understand the implications," Willie said.
Actuarial reports have indicated that the retirement system will become insolvent in the next decade unless action is taken to shore it up.
The audit did not find any material issues with the system, he said.
GERS Administrator Austin Nibbs said he would release a copy of the audit to the public once it is finalized.
The monthly and year-to-date financial reports given to the board Tuesday tell much the same story as the audit - the pension system is continuing to hemorrhage money.
In December, the system collected $4.7 million in employer contributions and $2.4 million in employee contributions but paid out $19.1 million in retirement annuities.
Overall collections - which include rent from tenants, loan payments to the system, and other collections - totalled $11.9 million for the month.
Overall expenditures, including annuities, administrative expenses, loans issued and management fees, totalled $23.6 million, creating a deficit of $11.6 million for the month of December.
December marked the end of the first quarter of the fiscal year, which began Oct. 1. To date this fiscal year, the system has a deficit of $37.7 million.
GERS investment officer Bruce Thomas told the board Tuesday that $20 million will be withdrawn from the system's investment portfolio this month to supplement operations.
He said the first quarter ended with the system's total portfolio valued at $989 million.
In other business, the board elected Vincent Liger as chairman and Dr. Wilbur Callender as vice chairman.
The board also approved the coming year's schedule of meetings, and created a new committee to deal with investment issues.
The board also ratified a poll vote to spend $135,000 to repair a broken elevator and $16,000 to replace an air-conditioning system. The board voted to increase the capital budget by $151,000 to accommodate the expenses.
After an executive session, the board voted to approve the Fiscal Year 2013 operating budget for the West Indian Co. to manage the Havensight Mall. The mall is owned by GERS, which pays WICO to manage the property.
Nibbs said the operating budget for the mall is $3 million. WICO receives 4.5 percent of the mall's revenues as a management fee.
The anticipated revenues for the fiscal year are about $7.6 million, Nibbs said.
Board members at Tuesday's meeting were Callender, Carol Callwood, Liger, Raymond James, Desmond Maynard, Edgar Ross and Leona Smith.
- Contact reporter Aldeth Lewin at 714-9111 or email alewin@dailynews.vi.
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