Few retirees of the VI Government Employees' Retirement System (GERS) were aware of the multitude of changes proposed in Bill 29-0099 submitted to the Legislature for consideration back in August. However, toady many concerned current employees and retirees are now trying to learn more about what can be done to help the system achieve solvency.
GERS is one of the critical components of the Virgin Islands economy. On a monthly basis, GERS pumps $18,734,236 into the economy. Without these annuity payments, retirees over 65 will only have Social Security income to exist on and those under 65 will have only their savings or income from their current employment to survive upon. Without question, if GERS payments to retirees stopped because the System failed, the Virgin Islands retirees may be plunged into poverty.
Bill 29-0099 is a genuine attempt to avert economic disaster by adding provisions to help the System increase its income and reduce System expenses. The Bill is the mechanism that both the GERS’ Board of Trustees and its management team are offering as a way to save the System. The most meaningful System changes include:
- Tier II Regular Employees ages: Raising the retirement age from 30 years of service, regardless of age or 10 years of credited service and age 60 as it is currently, Bill 29-0099 would change the age requirement from 60 to 65, and eliminating the age with 30 years of service.
- Tier II Class 3 Employees ages: Previously this group enjoyed retirement at age 50 with 25 years of service or age 55 with 10 years of service. Under Bill 29-0099 the recommendation is to eliminate the ability to retire at any age with 20 years of service.
- Raising the Retirement Age: The suggestion is included to raise the regular retirement age from 60 to 65 years of age.
- Contribution Rates: Increasing the Contribution Rates for employees as follows:
- Tier I – Regular Employees and Tier I –Class 3 Employees – increased 1% each year for 3 years (cumulative)
- Tier I – Employer increase contributions by 3%.
- Tier II – Regular Employees and Tier II – Class 3 Employees – Increased 1% for each year for 3 years (cumulative)
- Legislators to increase contributions to 15%
- Judges to increase contributions to:
- New Judges – 17%
- Sitting Judges – 15% at the beginning of their next term
- 16% at the beginning of their second year of their new term
- 17% from the beginning of their third year of their term and going forward
- Employer: Increase the Employer contribution 3% each year for the next 6 years (cumulative) to an ultimate rate of 38.5 percent of employee’s pay.
- COLA - Suspend the COLA indefinitely effective as of January 1, 2013.
- Salary Cap – eliminate the salary cap to the level of the Social Security Cap
- Refund of Contributions – for Tier I and Tier II allow refunds only to non-vested members
- Loan Recommendations –
- Personal Loans to active members would be increased loans from $50,000 to $75,000
- Car Loans increased from $18,400 to $40,000
- Mortgage Loans would increase from $200,000 to $350,000, and in special cases, up to whatever level the employee has the ability to pay back.
If you would like to review the Bill in its entirety, you can visit the GERS website at: www.usvigers.com . The Bill is listed under the heading: Legislation. Feel free to share your comments regarding this topic via our Facebook page follow us on Twitter!