Government retirees group demands GERS reinstitute annuity increases
Published: February 7, 2014
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ST. THOMAS - The advocacy group Government Retirees United for Fairness sent a letter to Government Employees' Retirement System board members Thursday demanding the board reinstitute the annual annuity increases and pay the retirees $3.3 million in increases they would have received in 2013.
The board voted to suspend indefinitely the annual annuity increases starting in January 2013, according to GERS Administrator Austin Nibbs.
Prior to 2005, retirees got an automatic increase to their retirement benefit each year. Retirees younger than 60 got an extra 1 percent, and those 60 or older received 1.5 percent.
While it was not a true cost of living increase, the automatic increase served a similar purpose. The Social Security Administration ties its annual increases to the Consumer Price Index and takes into account the rate of inflation.
In the reforms passed by the V.I. Legislature in 2005, the law was changed, giving the GERS board discretion in setting the annual annuity increase.
The V.I. Code says that the board can set cost-of-living increases for pensioners based on the Consumer Price Index and the retirement system's most recent actuarial valuation.
The system currently is facing a $1.8 billion unfunded liability, and actuaries predict the system will collapse in less than 10 years. Joseph Arellano, the attorney representing the Government Retirees United for Fairness, said that if the board is going to suspend the increase, it can do so only for those who retired after 2005, when the law gave the board that authority.
For everyone who retired before 2005, they retired under the law that prescribed an annual, automatic increase, and that right cannot be taken away, Arellano argues.
He cites a federal opinion made by former Chief District Judge Thomas Moore that finds retirees cannot be stripped of their rights simply because the local law is amended.
Arellano says suspending the annual annuity increase for retirees violates their constitutional rights, violating a long-standing contract between the V.I. government and the retirees.
"Once you retire, your rights vest, everything's solidified," Arellano said.
Before the law changed in 2005, it had been on the books for 35 years, he said.
The automatic annual increase is separate from the annual bonus retirees get from the V.I. Lottery. Those payments are based on a percentage of funds the Lottery brings in, so the amounts awarded to retirees can vary each year and are not guaranteed.
The retirees are demanding a lump sum payment for the amount that would have been paid to them in 2013 - approximately $3.3 million - not just for members of the Government Retirees United for Fairness, but for all retirees who would have been eligible for the automatic increase. They also are demanding that going forward the automatic annual increase be included in the retirees' regular annuity checks.
Arellano has requested a response from the board within two weeks.
- Contact reporter Aldeth Lewin at 714-9111 or email firstname.lastname@example.org.