After a V.I. government employee completes 10 years of service, he or she becomes vested in the system. This is good when you have a healthy retirement system. However, with the precariousness of the Government Employees Retirement System it can be bad. When employees become vested in the system they are no longer able to take the funds they contributed to the system out. They are locked in.
GERS Administrator Austin Nibbs told the GERS board Thursday more employees are becoming concerned with this and are resigning before they become vested in the system and then drawing all the money they put in GERS out.
“This is a problem we need to pay attention to,” Nibbs said.
He reported that in the past two years around 1,000 employees who were making contributions to the system have left. Of those who left between January and November 2018; refund applications were filed by 614 from non-vested members; 405 of those applications were processed, costing the GERS more than $6 million.
Nibbs told the board that if GERS has to pay out $7 million a year (he predicted more employees would jump ship as the projected bankruptcy in 2023 gets closer) that “is a lot of money.” GERS actually profits when an employee quits before being vested. The employee only gets back what he or she put in the system and not what the employer contributed. The problem appears to be the timing of withdrawing large amounts.
He added that the state of GERS was not only contributing to employees leaving government service early, but it was making it hard for the government to fill certain positions.
Nibbs told the board he had hope that the new administration with a “new attitude” might help resolve GERS’s problems.
Board member Carol Callwood said she thought the transition was overly aggressive in requesting detailed information from GERS. Nibbs told her that “in the spirit of cooperation” he was turning over all the information GERS had that the transition team requested.
Nibbs also saw a bright side in the case of recent retirees. He said the time between an application for retirement check was received and the first check being issued had been getting shorter if contributions were not missing. But here too was a dark side.
As a result of having to get materials for a hearing in District Court last month, his staff updated figures from 2013 which said the government owed GERS $47 million in back contributions. He said the new un-audited figures showed $72 million in missing employer contributions and $40 million in missing employee contributions. He urged all employees to check to see if they had any missing contributions. The Senate has appropriated $19 million to address missing contributions this year.
Speaking about the GERS bill debated in a Senate committee meeting Wednesday, board chair Wilbur Callender said the bill did not address pertinent issues and was an “absolute waste of time.” The bill would prohibit the board from making policy that would affect retiree benefits without first getting the green light from the Senate.
Nibbs said the board does not have the authority to reduce benefits. The notion of reducing benefits had been thrown around two years ago when an actuary recommended it. At that time the board determined it would be illegal.
However, Nibbs added, if something like a large infusion of cash does not happen “benefits will be reduced.” If you only have $10 million and owe $21 million, who are you going to pay.
Original Source: https://stjohnsource.com/2018/12/21/gers-problems-cause-employees-to-jump-ship/