GERS Suspends Loan Program Used By Retirees And Gov. Employees

ST. THOMAS — The Virgin Islands Government Employees’ Retirement System (GERS) board of trustees moved on Thursday to suspend its popular loan program often used by retirees and government employees at its monthly board meeting held at the GERS offices here, according to a press release issued on Thursday.

The move, according to board members, is to urge members of the 31st Legislature to adopt a measure aimed at saving GERS, which is projected to become insolvent in less than ten years. While the program’s suspension is currently temporary, the board says if a solution isn’t found to address solvency problems, it will be left with no other solution but to permanently end the program.

“This measure was taken to immediately address the liquidity issues affecting the System in order to ensure the availability of liquid funds to pay benefits, as well as to ensure the survivability of the System,” according to the press release.

In August of 2014, the then-Governor John P. de Jongh administration released a report that revealed GERS funds would continue to dwindle and that the system, if it remained on the current trajectory, will be bankrupt in just over ten years.

Over the last two years leading up to 2014, GERS assets saw precipitous declines of $21.8 million in unfunded liability, which in turn increased the amount of additional funds that the system would need to meet its future obligations by retirees to $124 million, an escalation of the grand total from $1.72 billion to $1.84 billion, according to the report.

The report, prepared by GERS’ actuary Segal Consulting, was intended to paint a clear picture of the health of the retirement system, most pointedly its projected ability to meet the financial obligation to the system’s retirees and current government employees.

According to Segal Consulting, the increase in the unfunded system’s obligations means that the unfunded ratio (the amount of funding the system has compared to what’s actually needed), has seen continuous declines from 45.7 percent to 40.2 percent. Segal Consulting has projected that GERS will be insolvent by 2025.

Other board action taken on Thursday includes the following:

• Authorized the Administrator to enter into an agreement with Segal Consulting to conduct an Experience Study of the System’s Actuarial  Assumptions for an amount not to exceed $30,000.00.
• Ratified a Poll Vote for Change Order No. 2 on the White House Project in the amount of $40,050.00 to LEBG LLC for unforeseen circumstances.
• Ratified a Poll Vote for increase to Jaredian Design Group due to LEBG LLC’s Change Order No. 2 for construction phase services in the amount of $3,500.00.

All Trustees were present at Thursday’s meeting.

Feature Image: GERS building on St. Croix.