With No Infusion Of Cash, Virgin Islands Retirement System May Decrease Annuities By 30% In 2017

ST. CROIX — At a pre-summit event held at the Government Employees’ Retirement System here on Monday (the GERS full summit was held on Tuesday), where senators and GERS officials gathered, GERS Board of Trustees, along with the pension system’s actuary, Rocky Joyner of Segal Consulting, raised a list of actions that must be taken to salvage the system — which is set to collapse in seven years or less, according to the actuary and board members — if an infusion of cash of either $600 million, $1.4 billion or $1.7 billion is not implemented before year’s end. G.E.R.S.’s unfunded liability is $1.7 billion.

One of the main considerations of the board is a reduction in tier benefits of persons not yet retired, and the annuities of those already retired, by a staggering 30 percent in 2017. In layman’s terms, if you are currently receiving a pension of, say $2,000 monthly from G.E.R.S., that amount would decrease by $600 next year, bringing your pension down to $1,400 monthly. The same goes for government employees not yet retired.

Senator Kurt Vialet, lamenting the broad-stroke language used by G.E.R.S., said a better solution would be to use a benefits-based system, whereby the percentage decrease would be reliant on how much a person receives. He said that taking away 30 percent of someone who receives only $1,000 pension monthly — leaving said person with only $700 — could lead to the destruction of livelihoods.

The decrease was the most serious of many considerations discussed at the pre-summit, with other ideas including a flat tax specifically for the pension system, and a mix of raising employer contribution and an infusion of cash — raised by Senator Clifford Graham — being the best-case scenario. It remains to be seen, however, whether the Government of the Virgin Islands is be able to secure the amount of funds G.E.R.S. says is needed to save the beleaguered system.

Read more: http://viconsortium.com/government-2/no-infusion-cash-gers-may-decrease-annuities-30-percent-2017/