Legislature to hear recommendations to fix GERS
Published: May 12, 2014
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ST. THOMAS - One year after a task force released recommendations to save the territory's government pension system, the proposal will be heard in the V.I. Legislature.
The Senate Committee of the Whole will meet 6 p.m. Tuesday, on St. Thomas, and 6 p.m. Wednesday, on St. Croix, to discuss reforms to the Government Employees' Retirement System.
No votes are taken in Committee of the Whole, but all 15 senators will be able to question testifiers.
Government Retirees United for Fairness is planning a rally for government retirees for 10 a.m. Tuesday in Emancipation Garden.
Group president Helen Hart said that because the hearings are at night, many retirees may not be able to attend. The morning rally will give retirees a chance to discuss the bill and organize ahead of the hearing, Hart said.
The group's leadership will be testifying at the hearing and the group is asking members to attend the hearings.
Also slated to testify at Tuesday's hearing is GERS Administrator Austin Nibbs and GERS board chairman Vincent Liger.
In May 2012, Gov. John deJongh Jr. signed an executive order to establish the Pension Reform Task Force. The recommendation to establish the group came from an Inspector General audit report of GERS.
DeJongh appointed members from the territory's chambers of commerce and Central Labor Council, and Senate Finance Committee chairperson or post-auditor, director of the Office of Management and Budget, GERS administrator, GERS board chairman and the governor's deputy chief of staff.
An advisory committee also was formed that included many of the same representatives on the task force, as well as representatives from AARP, the local group Advocates for the Preservation of GERS, V.I. Finance commissioner, director of Personnel, GERS actuary and the government's financial adviser.
The task force began meeting in the fall of 2012 and submitted the final report to the governor on April 29, 2013.
The recommendations were submitted to the Senate in May 2013.
In March, deJongh submitted a proposed bill to Senate President Shawn-Michael Malone that incorporates the task force recommendations.
The task force's goal was to find solutions to the ailing pension system.
The system's unfunded liability - the difference between what is being paid into the system in contributions and the obligation to pay out all retirement benefits - currently stands at about $1.8 billion.
During the last two decades, the unfunded liability has grown because of insufficient contributions, a ratio of fewer active employees to retired employees and unfunded legislative mandates, such as early retirement packages.
The proposed legislation is projected to halt the declining percentage of the GERS liability by 2018, and reverse the trend by 2024, according to Government House.
The legislation includes the following measures to reduce the unfunded liability:
- Asking employers and employees to contribute a larger amount toward pension benefits. The bill raises the employee contribution a percentage point each year for the next seven years, resulting in a 15 percent contribution rate by 2021. The government's contribution rate also will increase gradually, hitting 31.5 percent by 2021.
- Raising contribution rates for senators and judges.
- Reducing retirees' current benefits by 10 percent.
- Increasing the age and years of service needed before retiring. The bill would increase the early retirement age from 50 to 55 and the regular retirement age from 60 to 65.
- Limiting the annual cost of living increase. Under the bill, the cost of living annuity will be suspended until 2019, at which point the GERS board will review the matter every five years.
- Changing the formula used to calculate benefits.
- Contact reporter Aldeth Lewin at 714-9111 or email email@example.com.