March 15, 2005
Sen. Bert Stedman (R - Sitka) and Sen. Lyda Green (R- Wasilla) are leading the Senate's effort to address what they say is a retirement crisis. "This is a multifaceted problem. We have a five billion dollar unfunded liability, systemic problems that created it, and the need for predictability into the future," said Sen. Stedman.
Proponents of the legislation say it improves the management of the current retirement systems and it reduces future cost volatility by creating a defined contribution plan for public employees. Unlike a defined benefit plan in which employees are promised a benefit regardless of investment performance and system costs, a DC plan provides employees with a portable individual retirement account based on the contributions and earnings of employees and employers. "We've known for more than a year that our retirement system has significant problems and something has to be done. This bill is our solution," said Sen. Green.
This session the legislature is being asked to appropriate $108 million in state funds to make up for shortfalls in retirement funding for this year alone. This problem is not going away. "This massive liability is taking money away from everything else our state needs to fund. Roads, public safety and education all suffer because we have to keep pouring money into PERS/TRS," said Senate President Ben Stevens (R- Anchorage).
On Wednesday, Sen. Stedman will conduct a PowerPoint presentation on the Retirement Security Act to the Senate Finance Committee at 9:00 am in room 532 of the State Capitol Building.
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