No word on alternative revenue solutions as GERS moves forward with a 3 percent increase in employee contributions

A meeting between representatives of the Government Employees Retirement System and officials from the executive branch of government failed to produce anything to prevent GERS from implementing a 3% increase in required employer contributions on January 1, 2025.

“We have presented our financial position in terms of cash flows,” said Angel Dawson, CEO of GERS. “We have just reiterated that the system is still approximately 10% funded, and that despite the cash flows planned to be received from the Special Purpose Vehicle, there is still the possibility that the system will become insolvent sometime around 2037, 2038 will be.”

The meeting did not result in any final decisions from Governor Albert Bryan Jr. or his team, Mr Dawson said, in response to a question from GERS trustee Andre Dorsey, who stated he had asked to join the meeting but was not included. According to Mr Dawson, Government House indicated that “they were exploring a number of potential sources of funding that they could identify.” “I would assume that when they go through any investigation, they will contact us at that point.” Dawson said.

Thursday’s GERS board meeting did not include any discussion of alternative strategies the pension system could explore to meet its immediate funding needs, beyond relying on additional contributions from the already financially stressed government. With a diversified asset portfolio valued at $524 millionGERS has significant potential for revenue generation through avenues that could reduce dependence on government funding.

Mr. Dorsey suggested that a stronger, more formal plea should be made for the executive and legislative branches to agree on direct support for the GERS, a request that the system itself has made — and rejected — more than once before. “I still think that we as an administration need to show the governor how important it is that administrative costs are covered,” Mr. Dorsey said. “From a governance position, we should at least put something on paper stating the importance based on what our advisors explained to us during our retreat,” he urged.

Mr. Dawson said the GERS position was well represented among lawmakers and the governor, but Mr. Dorsey expressed belief that the GERS position would be further pressured. “We need to take a stand with the governor… to just say, ‘Hey, we need to get these administrative costs covered.’” In that scenario, Mr. Dorsey was confident that “this will help offset any unfunded liabilities that we see in the payouts coming out of the banknote.”

The issue stems from previous optimistic forecasts of a rate of $13.25 per gallon from rum cover funds, which are currently paid out at a reduced rate of $10.50.

The issue centers on the excise tax revenue from rum ‘cover-over’, which was initially valued in the securitization agreement at a rate of $13.25. However, this rate has since dropped to $10.50, with no clear consensus in Congress on when or if the higher rate will be reinstated. This decline has significantly reduced payments to GERS, undermining the financial basis of the carefully negotiated securitization deal. Although the VI Public Finance Authority claimed that the agreement could continue at the lower rate of $10.50, expressed confidence that Congress would eventually reinstate the $13.25 rate. But almost two years later, this optimistic vision has still not materialized. without a solution in sight.

While CEO Dawson acknowledged the government’s discomfort over the higher contribution requirement, he noted that he was clear about GERS’ position at the time. “We have the right to do this according to the law… and it would be highly irresponsible and a dereliction of duty if we as a board have a potential supply of money somewhere that we are legally entitled to, and we don’t ask for it. .”