Content starts here
CLOSE ×

Search

AARP AARP States About AARP

Where Do We Stand?

 

GERS Building
Photo taken by Ginny Dargan



The Government Employees Retirement System of the Virgin Islands (GERS) is in a very precarious position. The System’s Board of Trustees, its administrator, its staff and even its consultants and actuary have all warned the public that the System is nearing collapse. Earlier this year the actuary estimated the System’s life to be no more than 8 years if drastic actions were not taken immediately to enable the pension fund to become self-sustaining.

To date, no positive action has been taken to avoid the System’s pending insolvency.  Instead, several detrimental actions have occurred:

  •  In early 2013 the Legislature wrote itself a $40-million line of credit because of concerns for available government cash flow.  To provide cash for this line of credit, GERS would have to liquidate assets costing the System potential earnings as well as a potential expense for early withdrawal penalties.  There was NO consultation with the GERS Board or management to determine the impact of this action
  •  Actions by GERS to raise both contribution rates early in 2013 were stalled by a promise from the Governor that rates would be “taken care of” in the 2014 budget, yet no changes to the contribution rates materialized in the 2014 budget. This delay has cost GERS millions in potential investment capital
  •  The current active employee to retiree ration is 1:1.12. Most sustainable pension systems need a ratio of at least 4:1 to stay solvent. GERS is far below this benchmark
  •  In years past, GERS benefitted from exceeding its benchmark of 8% return on its investments.  However, due to the present world markets, GERS is fortunate to be making an average income of 4% for its investments.
  •  The GERS ratio of assets to liabilities now stands at: $916 Million (assets) to $1.8 billion (liabilities)
  •  During the month of September 2013 alone, GERS had a deficit of $11,240,244
  •  GERS will be liquidating $40-million in assets during October 2013 to:
    • Pay Benefits
    • Manage their accounting
    • Provide for its Employee Loan Program
    • Provide for smaller potential investments
    • Allow the system to have available cash on hand

 All GERS retirees and all potential future retirees should be asking themselves : Where do we stand? Does the 8-year collapse still remain on the horizon, or will the collapse be sooner?

 AARP Virgin Islands would like to hear from retirees and active employees. What do you think is a possible solution? What are you doing to provide for your future? How can AARP VI help?

About AARP States
AARP is active in all 50 states and Washington, DC, Puerto Rico and the U.S. Virgin Islands. Connect with AARP in your state.