Juneau Senator Dennis Egan’s bill giving public employees a choice of retirement systems cleared the Senate Finance Committee today (Friday).
During the Murkowski administration the legislature did away with the state’s defined benefit program – also known as a traditional pension – for all new hires since July 2006. Instead, the state’s Public Employee Retirement System went to a defined contribution plan, or a 401(k)-style retirement account.
Senate Bill 121 would allow public employees to opt for either program. The Finance Committee moved the bill this morning. Egan and Senators Joe Thomas of Fairbanks and Lesil McGuire of Anchorage recommended the full Senate pass the bill. Co-chair Lyman Hoffman had no recommendation and the other co-chair Bert Stedman recommended the bill be amended.
Unions and groups representing retired people say the current PERS system has hurt public employee retention, and forces workers to assume all the financial risk for retirement planning.
The Parnell administration opposes the bill, claiming that any defined benefit program would expose the state to too much risk.
Egan has said the goal was to make the bill cost-neutral.
If SB121 passes the Senate, it would still have to get through the House. The Legislature is scheduled to adjourn on Sunday.