Retirement System Boards Raise Employer Rates for FY 2006
April 27, 2004
Juneau, AK - Monday, Ray Matiashowski, Acting Alaska Commissioner of Administration, said that recent actions by governing boards for public retirement systems to raise employer contribution rates serve to underscore the need for a fiscal solution. On April
"The retirement systems have taken a double hit, from losses in the stock market and from skyrocketing medical costs," Matiashowski said. "State government, municipalities, and all school districts are grappling with this problem. Now, their costs will go up another 5 percent. The need for a fiscal solution that provides funding for essential state services could not be clearer."
"The latest financial reports indicate that even higher rates should be used," said Matiashowski. "However, the rate increase was limited to 5 percent. I support the PERS and TRS Boards' decisions regarding this matter. Although investment earnings have recovered substantially in 2003-2004, the effects of such earnings do not offset prior investment losses. Further, health care costs, a major component of system expense, continue to rise at double-digit rates."
According to the news release, before taking action, the boards reviewed the latest updated Actuarial Valuation and financial statements, held public meetings, and took testimony from employers and members. The boards conducted the same type of extensive review they have done in prior years before making a decision.
Quoting the news release, state retirement systems throughout the United States are experiencing similar financial strains. PERS and TRS pre-fund the health care costs of the retirement systems, while most other pension plans do not. As a result, the PERS and TRS systems compare favorably with other state pension plans, and are well positioned to weather the current 'pension storm'.
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