Under Financial Pressure, G.E.R.S. Will Raise Employer Contribution Effective January 1, 2020
VIRGIN ISLANDS -- The Government Employees’ Retirement System will raise the employer contribution for its pension plan by 3 percent effective January 1, 2020. The 3 percent hike will raise the rate from the current 20.5 percent to 23.5 percent, according to a memo the pension system distributed to a number of agency and department heads along with the governor, on Friday, and obtained by the Consortium.
G.E.R.S. cited Title 3 of VI Code, Section 718(b) as its basis for the increase. The same law allows G.E.R.S. to increase the employer contribution by 3 percent every five years until the percentage arrives at 30 percent on January 1, 2040.
G.E.R.S. is currently in a fight for its survival and has been for a long time.The retirement system has been hemorrhaging money for years now as it continues to dole out more money than it’s taking in, and as its investment portfolio has remained mostly stagnant.
At minimum, G.E.R.S. needs $400 million to add a few more years to the system, even if the injection of cash only kicks the $5 billion unfunded liability can down the road, according to Austin Nibbs, G.E.R.S. administrator, who spoke with the Consortium following an April G.E.R.S. board meeting. At the time, Mr. Nibbs said the pension system was readying a proposal seeking a $5 billion bailout from the federal government.
Read more: https://viconsortium.com/vi-top_stories/virgin-islands-under-financial-pressure-g-e-r-s-will-raise-employer-contribution-effective-january-1-2020