Retirees group demands GERS return what it withheld from 2010 retro payments

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ST. THOMAS - The Government Retirees United for Fairness have sent the opening salvo to the government and the retirement system, demanding that contribution withholding on the 2010 retroactive salary payments be returned.

The group of retirees, formed in October, has hired attorney Joseph Arellano to help them.

On Friday, Arellano sent a letter to Government Employees Retirement System Administrator Austin Nibbs, members of 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.

The retirees group's letter asks for documentation to prove that the 8 percent, Medicare and Social Security withholdings were in fact transmitted to GERS, Medicare and the Social Security Administration.

The letter also questions whether the government put in its share of contribution to GERS - 17.5 percent - and whether that money was received by the pension system.

When reached for comment Wednesday, Dawson told The Daily News that the government did make its contribution of 14.5 percent - the contribution rate in place from when the retro wages originally were withheld. He said the money for Medicare and Social Security, along with the 8 percent employee contribution to GERS, was all transmitted to the appropriate agencies.

The retirees' organization also said that, based on the time the wage increases were supposed to have been implemented, the money paid out in 2010 should mean that the retirement system must recalculate the annuity for each retiree who received a retro check.

Arellano said the law is on the side of the retirees.

"The required contributions for any service which have not been made prior to a member's retirement may not be made by any person after the member's retirement," according to Title 3 section 704 of the V.I. Code.

He said this means that the 8 percent employee contribution should not have been taken from the retro checks paid to retirees.

"The 8 percent withheld from the retiree' retro checks was clearly improper and was not in accordance with law," Arellano wrote in the letter.

"Please take this letter as my clients' formal demand that the sum of money represented by the 8 percent withholding from the October 2010 retro checks be remitted to each of them, and be further remitted to each and every one of the then-retirees who received a retro check from which the 8 percent GERS contribution was withheld."

Arellano requested a response to the letter within seven days.

Arellano told The Daily News Wednesday that he plans to call GERS and Finance leadership later this week to set up a meeting to discuss the matter.

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.

He said the letter is the first step to address just one of the issues affecting retirees in the territory.

Nibbs declined to comment about the letter, saying that it will be discussed by the GERS board at today's monthly board meeting.

- Contact reporter Aldeth Lewin at 714-9111 or email

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