By Sen. Johnny Ellis
March 08, 2006
The Murkowski administration and the Republican Legislative Majority claimed that an unfunded liability would collapse the current benefits system, and proposed changes through Senate Bill 141. I fought hard against this legislation, because I felt that it didn't solve the current issues with our retirement system, and also created new problems. Unfortunately, the bill passed during the special session, and was signed into law.
While most of the provisions of SB 141 will primarily affect future retirees, there are aspects that could have an effect on seniors today. I wanted to take a moment to go over a few of these changes that will affect Alaskan public employees and teachers of all ages.
Senate Bill 141 changes the retirement system for public employees and teachers hired after July 1, 2006 from defined benefit to defined contribution plans. While the proponents of SB 141 claim this shift will benefit workers, I believe many of these "improvements" are no help at all. Currently, the state retirement system provides workers with a defined monthly benefit for the rest of their life after retirement. These benefits have little investment risk, and low administrative costs.
Under the new plan, employees hired after July 1, 2006 will contribute a fixed amount into the retirement accounts, which will be invested in the stock market. This exposes workers to undue investment risks and could result in a net loss to individuals' retirement accounts, should the stocks do poorly. I do not believe anyone should have to gamble his or her individual retirement account on the fluctuating and unpredictable stock market.
Current retirees are not completely exempt from the new provisions. Changes to the adhoc post-retirement pension adjustment (PRPA) and the reinstatement rules could affect seniors today. I am also concerned about the dissolution of the PERS and TRS boards. Governor-appointed officials in The Office of Administrative Hearings now replace the member-elected boards in hearing appeals from both future and current retirees, further consolidating the power of the Governor's office.
I believe the changes enacted by SB 141 will not only impact workers and employers individually, but Alaska as a whole. Studies have shown that benefits are an important aspect to recruiting and retaining quality employees in the public sector because wages for most workers tend to be lower than the private sector. By abandoning defined benefits, I predict the state will have a harder time recruiting and retaining good teachers and public employees, including firemen and police officers. Experienced workers may seek jobs in other states with better, defined benefits, diminishing Alaska's competitive edge and lessening the quality of our public services.
Alaskans deserve a secure, guaranteed retirement fund. It's not too late; we can do better. Please contact your Senator or Representative and ask them to repeal SB 141.
About: Sen. Johnny Ellis (D)
is a member of the 24th Alaska State Legislature repesenting
District L - Anchorage. He has lived in Anchorage since 1975.
Sen. Ellis is the Senate Minority Leader.
and do not necessarily reflect the opinions of Sitnews.