GERS clarifies amount of money withheld from retroactive payments
Published: February 6, 2014
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ST. THOMAS - The amount of money withheld from government retirees' retroactive payments, as an employee contribution to the territory's pension system, is about $1.5 million, according to Government Employees' Retirement System Administrator Austin Nibbs, who clarified a statement he made previously about how much was withheld.
Nibbs had said that the amount withheld from retirees was about $6 million, but in a letter to the group Government Retirees United for Fairness, Nibbs changed that amount.
He said the total contributions withheld from all the retro checks issued in 2010, for both active and retired employees, was $7.1 million.
Of that total, only about $1.5 million was deducted from checks issued to retirees, Nibbs said.
The group Government Retirees United for Fairness, formed in October, has hired attorney Joseph Arellano to represent them in matters concerning government retirees.
Last month, Arellano sent a demand letter to Nibbs, the GERS board and V.I. Finance Commissioner Angel Dawson Jr. seeking answers to questions about the retro payments made to some retirees in 2010.
Between 1989 and 2002, the government negotiated salary increases that never were honored for some collective bargaining units. In 2007, legislation established the Retroactive Wage Commission to determine exactly who was owed how much.
After three years of reviewing more than 1 million paper documents, the commission determined that 10,718 past and present government employees were owed $219 million in retro pay.
The Retroactive Wage Commission had a set amount of money to use to pay the retro - $45 million from the Insurance Guaranty Fund - so they developed a formula that would give each individual 16.7 percent of the total amount owed to them.
When the retro money payments were made to the government's retirees, the checks were disbursed by the V.I. Finance Department, which withheld Medicare, Social Security and 8 percent for the employee's contribution to GERS.
Chief among the retiree group's complaints is that the 8 percent employee contribution should not have been taken from the retro checks paid to retirees in 2010.
In response, Nibbs agreed with the retirees but said the law restricts him from repaying the money that was withheld.
Nibbs also addressed another concern raised by the group of retirees about whether the retro checks required the retirees' annuities to be recalculated.
Nibbs said the annuities were not recalculated because the law states that a recalculation can only be done to correct an error.
"Again, the GERS has no objection whatsoever to refunding your clients the deducted employee contributions, but the Virgin Islands retirement laws, as written, do not permit the GERS to perform neither a refund of the employee contributions nor a recalculation of the retirement annuities," Nibbs' letter stated.
Arellano replied to Nibbs' letter Friday, saying that the money withheld from the retro payment to retirees should not be considered a contribution, so the law limiting the refund of contributions should not apply.
Nibbs had indicated that he sent proposed legislation to correct the problem to the Senate in 2010, but Arellano said his interpretation is that legislative action is not required.
"In short, my clients are entitled to the money without any amendment to the V.I. Code; and the act of submitted proposed legislation to the Senate, my clients fear, will only obfuscate and further delay this already far too-delayed matter," Arellano's letter stated.
- Contact reporter Aldeth Lewin at 714-9111 or email firstname.lastname@example.org.