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August 3, 2007
Gov. deJongh addresses GERS unfunded
liability
Gov. John P. deJongh, Jr., met recently with members of the Government Employees Retirement System (GERS) Board of Trustees to discuss a comprehensive funding plan to accommodate the current GERS unfunded liability. As part of an inclusive, results-oriented approach, deJongh proposed a proactive and vigorous solution to the current GERS obligation.
"Addressing the unfunded liability is a top priority of my administration. With financial disbursements continuing to outpace employee and employer retirement contributions, it is a matter of financial health that we address the funding options needed to bring resolution to the immediate fiscal pressures and quell the concerns of our Virgin Islands
pensioners," deJongh said.
A key element of the funding plan entails the issuance of $500 million in pension obligation bonds over the next three years, supported by an increase in Government employer contributions to 17.5%. In addition, the deJongh/Francis administration pledges a one-time contribution of $20 million in Fiscal Year 2008, and maintains a commitment to full funding of annual, normal, and Unfunded Actuarial Accrued Liability (UAAL) costs in accordance with government standards.
"Utilizing a 30-year amortizing pension bond to fund the $1.1 billion unfunded liability will save the V.I. Government considerable amounts annually. It is the goal of my administration to maximize on investment and cost savings measures in total, so that we can begin to move towards a healthier financial and fiscal situation. One that provides security for our retired workers, adopts cost-effective management practices and implements sound investment policies as part of our strategy to make continuous improvements moving
forward," deJongh said.
The unfunded pension fund liability is the gap between what has been promised to retirees and what is projected to be available to meet those promises. The administration’s funding plan reflects a commitment to taking measures needed to pay down the unfunded liability, stop it from growing in the future, and assuring that all obligations due to pensioners will be met.
Currently, GERS is continuing to pay out more in benefits than it is collecting in contributions. With the authorization in place to issue $500 million in pension obligation bonds during the 2008 calendar year, along with the increase in contributions, the overall burden of the historic under-funding will be alleviated. |
