Lawmakers to Consider Changes to State Retirement System
September 14, 2011
Currently new employees do not earn a defined benefit after 20-30 years of employment as do employees hired before July 2006. Instead they and their employers make contributions to a 401(k)-style account, which can be accessed when the employee leaves public service. Monthly or annual benefits of a particular size are not guaranteed, but vary according to how much the employee has contributed and how their investments have fared.
Under Senate Bill 121, sponsored by Senators Egan, Menard, Paskvan, Davis, Kookesh, Wielechowski, Ellis, Thomas, and French, teachers, troopers, firefighters and other public employees could choose between a traditional defined benefits plan and the newer defined contribution system.
“We have designed a retirement plan that will cost employers less than previous plans, saving money for schools, cities and the State of Alaska,” said Senator Dennis Egan, the bill’s prime sponsor. “At the same time, this bill will make employment in Alaska as desirable as employment in other states, which reward long-time public servants with defined benefits.”
Alaska is the only state in the nation that provides new employees with neither a defined benefit plan nor participation in the national Social Security system.
“The teachers who educate our children, the police and firefighters who protect our families and the other public employees who serve our state and cities deserve a choice in retirement plans,” Senator Egan added. “This is a fiscally responsible way to provide that.”
The committee will hear from a nationally recognized expert in pension plans who says the proposal will both save money and provide more secure benefits for employees.
The Parnell Administration will also have an opportunity to provide comments.
“Alaskans who dedicate their lives to public service deserve to know they will be taken care of in retirement,” said Senator Bill Wielechowski, who chairs the State Affairs Committee. “If we can do that and protect the state treasury, we should do so. This bill appears to walk that fine line.”
Source of News:
Senator Bill Wielechowski