Half of members of the Alaska Senate formally announced their support on Wednesday for legislation designed to restore the pension system for all employees of the state, and many more are expected back the proposal.
A long-standing priority for the public-employee organizations, senators have said they are looking at the proposed “defined benefits” pension system — that is similar to the one that was slashed by state legislators in 2006in order to combat the fact that one out of five state jobs is unfilled.
“You are bringing this back and I think that the problems of recruiting will begin to ease,” said Sen. Click Bishop, R-Fairbanks, and One of the legislation’s authors.
It’s an error to assume Senate Bill 88 would bring the state’s retirement system back to the past to achieve the goal, according to Senator. Cathy Giessel, R-Anchorage and the bill’s principal sponsor.
“This is not your grandmother’s fixed benefit program. This is a brand different system” She said.
The public employees will have be paid more they would with the older system. That amount could increase in the event that state retirement experts decide that it is necessary. Contrary to the previous system, there is no health insurance would be included however there is one small savings account that would cover the time between retiring and reaching the age of eligibility for Medicare. State employees currently employed will be offered the chance to transition to the state’s current 401(k)-style pension system, to the new one as well as any new hires would have to switch to this new retirement system. Police firefighters, police and other members of the public safety workforce could retire at the age of 50 after twenty-five years’ experience (or at the age of 55 after 20 years of service) as teachers and other employees of the public are eligible to retire at the age of 60 or after more than 30 years’ experience. Retirement benefits would be calculated on the highest five years of earnings and would not be offered to anyone working shorter than five years. There will be no cost-of-living bonus for those who retire in Alaska as well as the state’s supplemental benefit systemthat allows employees to take home another (matched with the help of state) 6.12 percent of their earnings — will remain unaffected.
Senate president Gary Stevens, R-Kodiak, is the bill’s third co-sponsor and stated that public employee recruitment and retention have always been a top priority for the seventeen-member Senate majority and this bill is a response to this need.
“I’m delighted to see that Sen. Giessel has taken the task. It’s evident that it’s been quite a bit of effort,” he said.
A coalition of unions comprising firefighters, police, teachers and other employees of the general government, declared that they would be supporting the legislation on Wednesday. They also said they would be lobbying lawmakers to get it passed.
Along with it’s sponsors of three seven lawmakers from the Senate have signed on as co-sponsors on Wednesday. Senator. Jesse Bjorkman, R-Nikiski was not a co-sponsor or sponsor of the bill, but was present at an announcement at a news conference to announce the bill’s release.
Bjorkman is chair of the Senate Labor and Commerce Committee that will get the bill first. the senator said he’d like to have hearings “as as soon as is possible.”
Senator. Kelly Merrick, R-Eagle River, said she was in support of the bill’s concept, however she would like to look into the specifics more thoroughly and she said she is looking to “to the assurance that the defined benefit plan that is efficient and financially sound.”
Stevens said he’d prefer for the legislation to become into law next year, but said it would be “very difficult to achieve,” not least because the bill must also be able to be approved by the state House as well as Governor. Mike Dunleavy before becoming law.
Giessel stated that the Senate majority regularly talks with Dunleavy as well as the top leaders of the majority Republican majority coalition of the House Giessel said she is expecting to discuss with them the pension reform bill as it moves forward.
Stevens stated that the bill will likely be amended as it progresses throughout the legislative procedure and lawmakers find out more about the specifics.
An actuarial study of a thorough nature is not yet completed However, Giessel stated that she anticipates the numbers on the books to be like last previous year’s House Bill 220, which suggested a pension plan which would not have increased state costs. This bill – which did not provide health benefits – was killed at the close in the 32nd Legislature without House or Senate approval.
The pension bill is a typical part of legislative sessionssenators who represent Juneau since 2006 have introduced the bills every two years, but this one has more support than previous initiatives.
Senate Sen. Bert Stedman, R-Sitka and co-chair of the Senate Finance Committee, has been averse to previous legislation and was seated in an office at the rear while his colleagues unveiled the latest bill in a press event on Wednesday.
He added that he is still concerned about the massive unfunded debt caused by actuarial miscalculations during the time that the prior state pension system was in place.
Senator. Bill Wielechowski, D-Anchorage and a defender of the bill, pointed out that Senate Bill 88 keeps a repayment option that’s in the existing formula for state retirement.
“We’re not going away from it in the near future,” he said of the liability that is not fully funded.
Senator. Shelley Hughes, R-Palmer is not a part of the 17-member Senate majority, and she attended the news conference of the majority in her home office.
She’s still studying the specifics that the legislation entails, she added she’s yet convinced that switching to a retirement-style retirement system can help with recruitment.
“I think that the young generation is looking for mobility and flexibility,” she said.
In the current pension system, it is the individual has the responsibility for risk. In the event that their investments fail and the state doesn’t have to fill the gap. In a defined benefit plan similar to the one suggested by the new legislation, the state would be required to raise additional funds in the event that pension funds fail to meet the payouts.
Hughes stated that she is worried about this risk.
“No risk is more risky than a certain risk, and there’s some risk if we adhere to a defined advantages,” she said.
