The Office of the Virgin Islands Inspector General has issued the inspection report of procedures to control the re-employment of retired Virgin Islands Government (Government) employees. The objectives of the inspection were to determine: (1) what controls were in place to timely identify when a Government retiree was re-employed by the Government, (2) what procedures were followed by the Government to comply with laws and regulations governing retiree re-employment and, (3) what steps the Government Employees Retirement System (GERS) took to identify retirees who return to work and its impact on the retirement system.
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. Specifically, Government officials did not always notify GERS when it hired a member retiree. Also, Government officials failed to implement checks and balances policies and procedures to ensure compliance with the return-to-work law.
GERS has identified and is analyzing the status of 65 re-employed retirees for possible violations of the return-to-work law. As of May 28, 2020, GERS had completed the review of 37 of the 65 re-employed retirees. Consequently, GERS determined, and its report shows, that GERS paid $2,068,736 in annuities to 22 retirees who violated the return-to-work law. In addition, GERS did not collect $1,172,676 in contributions from retirees and the Government that was due to GERS when the employees exceeded the allowable period for which they could return to work without forfeiting their retirement benefit. The report shows that GERS collected $335,541 in repayment, leaving $2,905,871 owed.
As a result, 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.
These issues will continue to exist if the Government, through its departments and agencies, and instrumentalities, continues to sidestep the requirements of the return-to-work law.
We made several recommendations to address the conditions and causes cited in the report. Our recommendations addressed the following areas: (i) policy and procedures (ii) adhering to the law (iii) collaboration and communication between agencies and GERS and, (iv) Legislative Revisions to the Virgin Islands Code. To view the report, click here.