The Government Employees’ Retirement System trustees Thursday heard a plan to save the failing pension system, but it will take 20 years and see present retirees’ monthly checks cut by 44 per cent.
The plan was presented by representatives from the firm of Segal. It included a recap of projections that show, if nothing is done, GERS will be insolvent in two or three years and cuts to retiree checks could be as high as 70 per cent.
The plan, which aims to make the cuts smaller and begin them next January, introduced some new ideas. Cuts to the pensions of the oldest retirees would be smaller, and disabled retirees would not see any cuts. The plan also would not cut Tier II retirees’ benefits. Tier II employees contribute higher percentages of their wages to the system and receive smaller annuities. All employees hired since 2005 are Tier II.
One of the presenters said the plan would give hope to present employees and recent hires that the system will work for them. The board has previously discussed the strategy of some employees cashing out. If an employee leaves the government before working 10 years, she can withdraw the money she paid into GERS. This is seen as a motivation for some to quit the government.
“To receive this information and do nothing is not an option,” trustee Nellon Bowry said.
Others on the GERS board agreed with him, and the board decided to either discuss it at a board retreat or special meeting devoted solely to that issue. The body would then make a recommendation to the Senate. However, trustees said that they had little hope for Senate action if it entails cutting retiree checks.
Trustee Carol Callwood, looking at the treasurer’s report, said the difference between what is coming into GERS and what is going out is growing. She said the system is now looking at a shortfall of $14 million a month. Last month the shortfall was $10 million.
Businesses leasing property from GERS in the Havensight Mall are not happy with the board’s recent decision to delay the collection of rent from them in March and April. They sent a letter to Austin Nibbs, GERS administrator, asking for a 50 percent reduction in March rent and no charges for rent in April and May. They wrote that the cruise season came to an abrupt halt on March 13 and most of the stores are seeing zero traffic. No one expects to see cruise ships back in the territory until July. The board took no action on the request saying they want to be sure businesses exhaust all other methods of relief available to them.
Nibbs said the Havensight area looks like a “ghost town.”