The Alaska Senate – on a 14-6 vote Saturday – passed Juneau Senator Dennis Egan’s bill giving public employees a choice of pension systems. But it was too late for the measure to be taken up in the House.
Senate Bill 121 would have allowed public employees to choose either a defined benefit plan – also known as a traditional pension – or a defined contribution plan, like a 401(k) retirement account.
During the Murkowski administration the legislature narrowly did away with the state’s defined benefit program for all new hires since July 2006. At the time, lawmakers who voted to stop providing a traditional pension to new employees pointed to the Public Employees Retirement System’s unfunded liability, which was between $5- and $6-billion dollars. Today it’s more than $11-billion.
In order to ensure that wouldn’t be the case with a new defined benefit system, Egan said SB121 would make public employees contribute more to their retirement.
“Most employees will have to be eligible for Medicare before the system helps pay for retiree health care, and they’ll always pay a share of retiree health care premiums,” said Egan. “Let me emphasize, Mr. President, to make the new system cost neutral, employees will share the risk of health care costs rising in the future. That’s a risk worth taking, I believe. And I believe it’s fair to Alaskans.”
Sitka Senator Bert Stedman said he wasn’t quite convinced the bill would eliminate the risk of unfunded liabilities to the state. But Stedman said the conversation about the state’s PERS system and other benefits provided to public employees is evolving.
“The polarized discussion, I think has moved behind us,” said Stedman. “And we are continually moving forward trying to improve our benefit structure, and our pay structure, and our working conditions, and just the desirability to work as firefighters, or work for the State of Alaska, or as policemen, across the state.”
Stedman, along with Senators John Coghill, Fred Dyson, Cathy Giessel, Charlie Huggins and Tom Wagoner voted against the bill.
Even if SB121 had passed both chambers of the Legislature, it was strongly opposed by the Parnell administration.
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