Committee revises Egan’s retirement bill
Public employees who choose a traditional pension under a bill sponsored by Juneau Senator Dennis Egan may have to share more in the rising cost of health care, after changes made by the Senate State Affairs Committee today (Thursday).
Senate Bill 121 would let public employees choose either a defined benefit program – also known as a traditional pension – or a defined contribution program, like a 401(k) retirement account. During the Murkowski administration, the legislature did away with the defined benefit program for all employees hired since July 2006.
An actuary’s analysis of the bill shows the state would initially pay less for both health care and retirement for those employees who choose a defined benefit. But the savings would diminish over 30 years due to rising health insurance costs.
The State Affairs Committee adopted an amendment written by Egan’s office calling for a review of the costs every five years, so adjustments can be made to employee and employer contributions.
Egan says his goal is to hold the state’s retirement costs steady.
“Hopefully things will stabilize, but everything regarding health insurance right now is in such flux,” he says.
Unions and other groups that support Egan’s bill say forcing workers into a defined contribution plan hampers retention of public employees. The bill has ten co-sponsors and bipartisan support.
The Parnell administration opposes the measure.
State Affairs Chairman Bill Wielechowski says he hopes to move the bill out of his committee next week.