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US Virgin Islands’ Pension System is Nearing Collapse

You’ve probably heard by now that many major US pension systems are in some degree of trouble, especially California’s CalPERS.

None are closer to collapse than the US Virgin Islands’ pension system, however, which is projected to be insolvent as soon as 2023:

It contributes about $250 million annually to the Virgin Islands economy, with a multiplier effect of over $600 million. It pays out over $20.5 million on a monthly basis to its members, with 8,545 retirees and survivor beneficiaries depending on it for their livelihoods. Yet, the Government Employees’ Retirement System (G.E.R.S.) has been blatantly ignored by the current administration, whose governor has oftentimes assailed its board members and has called on its administrator, Austin Nibbs, to resign.

G.E.R.S. is dying. The pension system has been in trouble for years, but the situation has escalated so badly that it is projected to collapse in 2023 or before, depending on market conditions, according to Mr. Nibbs. With the imminent threat of insolvency, the board wrote to the 32nd Legislature on November 20 detailing the system’s debts, the government’s lack of payments, and why G.E.R.S. should be considered in any measure approving loan agreements between the Federal Emergency Management Agency (FEMA) and the Government of the Virgin Islands (G.V.I.).

The G.V.I., which is the plan sponsor of G.E.R.S., has underfunded the pension system by $1.6 billion, according to the letter. In September 2016, G.E.R.S.’s total pension liability, which is its total obligation to beneficiaries, was $5.5 billion, and the total net pension liability was $4.6 billion. Yet even with its ballooning debt, G.E.R.S. continues to lose value as it sells assets to pay members. The pension system’s assets are currently valued at $670.1 million — a fraction of its total debt. G.E.R.S.’s actuary, Rocky Joyner of Segal Consulting, has consistently said that a large infusion of cash is needed to shore up the fund, but the plan sponsor has not stepped up to the plate, and the Mapp administration has shown little interest in helping the system, according to the letter.

The government has been grossly delinquent in paying its employee and employer contributions, and employees’ loan deductions. As of Oct. 21, the government had not paid employee contributions, employer contributions, or employee’s loan deductions from pay date July 20, 2017 through November 9, 2017, according to G.E.R.S. The letter further revealed that most of the government’s semiautonomous agencies were delinquent on making employee and employer contributions and loan deductions as well. The law states that contributions must be paid to G.E.R.S. no more than ten days after pay date.

 
Doomberg

Written by Doomberg

I am Doomberg, one of the original founding members of Sparta Report, and have been here since the beginning. I am an insatiable news junkie and enjoy reading and writing about the US territories, the Caribbean, video games, smartphones, and of course conservative politics in general.

I also really like pictures of gas stations and claim full responsibility for the silly gas station motif. I'm presently trapped behind enemy lines in a blue state with no hope of escape! The ride never ends.

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