The state agencies of Alaska are in the middle of an unemployment crisis and are struggling to encourage new hires to retain their existing staff. According to a report from last year, one-in-five state jobs are vacant.
A new bill that was introduced in the State Senate this week is aimed at tackle the problem of the lack of workers with an overhauled retirement system.
It is a “defined contribution” or 401(k)-style plan allows employees to control their retirement account investment. In this plan employees take on all the risk. And, according to the report by the Division of Retirement and Benefits the majority of them don’t have enough savings.
“Employees weren’t earning enough under this defined contribution program to be able to retire and save sufficient money in order to sustain their own needs,” said Sen. Cathy Giessel, an Anchorage Republican who introduced the latest bill on Wednesday with nine co-sponsors from both parties.
Giessel’s bill will return public employees to an existing pension plan that will provide guaranteed payments at retirement. The state was forced to abandon the more extensive defined benefit pension system in favor of the current plan for defined contribution in the year 2006. The move was motivated by fears that the state could not pay for the prior pension system.
There won’t be a fiscal assessment of the amount that the new system will cost to the government until after it has passed through the process of a committee however Giessel said that she anticipates it to remain “very cost-effective.”
“If we can better retain state employees and ensure that they stay at work this will result in huge expense savings to the state. In addition but it also benefits the Alaska public superiorly,” she said.
One of the ways that lawmakers are looking to keep the pension system as efficient as possible is not offering health benefits to retirees. However, employees who have retired can access the health reimbursement account until they qualify to be eligible for Medicare.
Jeff Kasper, business manager for the Alaska Public Employees Association, said it’s not the best solution, but it’sn’t a major issue. He added that the return to a pension plan is the primary goal since change in.
“Anything’s likely to be better than the one the state employees are currently working on,” Kasper said.
Giessel’s bill must go to committees like the Senate Labor & Commerce and Finance committees before getting on the Senate floor.
It will likely face an uphill battle in the conservative-majority House. Rep. Andy Josephson, the Anchorage Democrat who is in the House minority, has introduced an amended version of Giessel’s bill that seeks to reform retirement systems just for police officers. The bill’s fate is uncertain also, as it is awaiting three committees left to go through.
“There’s greater support in her legislation within the Senate than there is support for my bill within the House,” Josephson said and added that he’d be happy to accept Giessel’s “everyone” legislation.
Giessel said she doesn’t know what might take place in the House However, she’s optimistic she and others who support the bill can rally supporters to”everyone” in the “everyone” legislation.
