GERS Board of Directors to Receive Update on Financial Projections and Investment Options | New

The VI Government Employees Retirement System board of directors is planning a two-and-a-half-day retreat at its St. Thomas office, where administrator Austin Nibbs said members would see the latest modeling of possible financial outcomes for the plan. government retirement. The board also plans to discuss alternative investments and the possibility of reinstating a loan program to boost income in retirement, which begins today and ends Wednesday.

“The first day will be dedicated solely to investments and actuarial assumptions. It’s going to be a long day and a very interesting day,” Nibbs said during a meeting on Friday.

At the retreat, which is not open to the public, accountants from New York actuary Segal Consulting will present their latest calculations to the board.

“I know Segal had plans to do some modeling that they did about three or four years ago for us, and they plan to do that, they plan to bring down at least three or four of them, and they’re going do some modeling to show different assumptions and what the results would be if we did this, and did that, and all that,” Nibbs said.

For years, GERS has been on the brink of disaster, and Segal Consulting had predicted that the pension system “will be insolvent by October 2024 or sooner.” The GERS board has warned that if the unfunded liability estimated at $1.6 billion is not resolved, retirees could face a reduction in their benefits of up to 71%.

In January, the Legislature passed Bill 34.0188, which seeks to address the impending insolvency of the retirement system by refinancing hundreds of millions of dollars of current government debt VI at higher interest rates. low and pouring billions of dollars into rum hedging. revenue over the next 30 years to repayment of debt with surplus funds and savings accruing to GERS.

Governor Albert Bryan Jr., at a press conference in April, announced that the first of 30 years of installment payments to GERS had been made in the amount of $89.2 million.

The territory’s 9,000 government retirees “no longer have to worry about pension cuts,” Bryan said at the time.

By the end of 2022, the system should be infused with a collective total of $250 million, and Bryan said the following year will inject $157 million, and every year after that until the obligation be fulfilled in 30 years. Overall, the arrangement is expected to bring $3.8 billion to the Virgin Islands pension system.

Nibbs said that at the board retreat there will also be a presentation “incorporating alternative investments.”

The alternative investment program was created in 2005 with the aim of increasing revenue by allowing GERS to engage in riskier investments with higher rates of return, according to a 2016 report from the office of the Inspector General VI.

Furthermore, he noted that alternative investments made with pension funds by GERS were risky, unsupervised and illegal, and GERS repeatedly ignored warning signs that the investments were in trouble and continued to pump money into companies despite many red flags.

GERS said it performed due diligence on all investments and agreements, but the Inspector General’s report indicates that GERS failed to properly verify several investments, in particular a loan to the owner of the resort of Carambola.

Rather than renege on its original $15 million loan, GERS spent an additional $12 million on the property and eventually repossessed the property when the loan went into default, according to the report.

GERS purchased the property for $6 million and sold Carambola in July 2019 for $10.1 million, and received $17.6 million in insurance proceeds due to damage from the 2017 hurricanes , according to information from GERS.

Nibbs told board members on Friday that he was considering hosting the retreat in Carambola, but rental prices have skyrocketed since the days of GERS ownership.

“We watched Carambola, which would have been ideal. However, it is overpriced, compared to what we paid. Nibbs said that although he found a place in St. Thomas, he didn’t, for me, have the proper technology for us that we needed, so we decided to come in and use our room. conference here in St. Thomas.

Nibbs told board members on Friday that day two of the retreat, “is going to be the auditor, and then ethics training, governance ethics, by one of our outside companies. that we use for our investments. In addition, we are going to have a legal part.

The third day will be for staff presentations on the information technology needs of the system, and “we’re going to make a presentation, our recommendation regarding the reinstatement of the loan program.”

The personal loan program was suspended in 2015 due to concerns about the financial situation of GERS. Governor Kenneth Mapp signed legislation in 2016 requiring GERS to make loans of up to $10,000 to any member of the system who has contributed for at least two years, but the board voted to keep the program on hiatus.

The 2016 Inspector General’s report noted that although GERS had ceased making loans to its members and had suspended the alternative investment program, “GERS continues to make loans to non-members”, including an $11 million loan to a bankrupt St. Thomas supermarket. , of which at least $480,850 was “diverted for unauthorized purposes”.

GERS continues to service personal loans issued before the program was suspended, and Nibbs reported to the board on Friday that as of May 31, there were 1,547 units remaining, including 78 mortgages. The total portfolio outstanding is $17 million. He said 526 loans are due to mature at the end of this year, and the number of loans maturing at the end of 2023 and 2024 is being reviewed.

Board members also met in executive session on Friday, out of public view. When they returned to open session, member Pedro Williams reported that the council had discussed ongoing cases with the system, including “the Levron Sarauw case as well as the Mary Duggan case”.

He did not specify the nature of those discussions, and council member Ronald Russell added another item of the executive session discussion to the public record.

The filing “should also state that we were discussing alternative investments and that we have agreed to leave this to the board retreat as this is an issue that we have not resolved and we should discuss this at the board retreat. . Plus, that should be on the record as well,” Russell said.

Board members have been given a draft agenda for the upcoming retreat, but Nibbs said in response to questions from the Daily News that it will not be made public until the agenda is finalized. not finalized.

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