Double Dipping Employees Costs GERS Millions *Update: GERS Responds*

Virgin Islands Inspector General Steven van Beverhoudt testifies before the Finance Committee in July 2020. (Photo by Barry Leerdam, V.I. Legislature)

The Inspector General concluded a report last month critical of how the government has handled the rehiring of retired government employees.

The Government Employees’ Retirement System spent more than $2 million in annuities to 22 individuals who violated the return-to-work law and the system did not collect more than $1 million in contributions it should have from the retirees/employees, according to the report.

GERS agreed with most of its assessments and said it was taking measures to stop illegal annuities and to collect contributions it was owed.

The report was titled “Inspection of Procedures to Control the Re-employment of Retired Government Employees.”

Other findings included the government did not always notify GERS about retired members’ re-hiring, nor did it always follow existing laws concerning retired employees’ reemployment.

According to the report, 12 retirees were allowed to double dip for up to two years and nine months after an executive order was issued to stop the double dipping. These retirees accounted for $1.6 million of the annuity overpayments.

In a Sept. 30 letter to Nellon Bowry, chairman of the GERS Board of Trustees, V.I. Inspector General Steven van Beverhoudt wrote, “We found that government officials did not always follow its return-to-work law and executive order. Also, government officials did not implement adequate internal controls to identify and report to GERS when they hired a retiree. Additionally, we found that the GERS’ measures taken were not sufficient to determine when retirees returned to work or to deter violations of the law.”

GERS responded that it “will continue its efforts to reconcile, determine, and collect all overpaid contributions owed by retirees who violated the return-to-work law.”

One of the report’s conclusions was, “When the agencies’ human resources representatives do not convey re-employed retirees’ information to GERS, the system runs the risk of overpaying the retirees’ annuity, not timely effectuating the collection of contributions from the employee and the government, and subjecting the retirement system to lost investment income. “

GERS officials said they will continue to issue an annual letter to the heads of departments, agencies and copy the governor, human resources directors, and personnel professionals, about their responsibilities when a retiree is hired.

Van Beverhoudt commented that though the letters were important, his office encouraged GERS “to explore other avenues to make agencies aware of their responsibility and the legal implications of not following the return-to-work law.”.

The report said investigations showed that the Division of Personnel does not have written policies and procedures specific to the return-to-work law.

However, interviews indicated Personnel has an unwritten requirement that departments and agencies send a letter to Personnel requesting approval to employ a retiree. Those same interviews indicated that not all agencies follow this practice.

Last month the Inspector General issued a report critical of GERS handling of a loan to V.I. Finest Foods.

GERS audited itself in 2018 on how the rehiring of retired employees affected GERS. Some of the same issues surfaced in that report.

Update: GERS responded to the report.