The bill, SB121, was heard by the Senate State Affairs Committee. At least half the Senate has signed onto the measure, which would give new and current public employees the option of choosing which is best for them. The bill's primary sponsor is Sen. Dennis Egan, D-Juneau.
In 2005, the Legislature passed a measure taking the state from a defined benefit, or pension, program to defined contribution, or 401(k)-style, benefit. Union leaders say this was a mistake, and has hurt employee retention.
Since the law's passage, the state has still seen its unfunded pension liability rise. The obligation is currently estimated at about $11 billion.
Sen. Bill Wielechowski, D-Anchorage, and a co-sponsor, said the goal is to have the measure be as "revenue-neutral" as possible, so as not to cost the system any more. A fiscal note is pending. Under the proposal, current employees who switch to the pension plan won't automatically be entitled to credit for all the time they've worked; an actuarial calculation would determine that. If there's a gap, those employees can create an indebtedness to make up any shortage, up to the actual years of service. It would be up to the employee -- not the system -- to bridge the gap.
There are an estimated 13,000 employees between the public employees' and teachers' retirement systems. About 60 percent who are currently in defined contribution programs are expected to switch if the bill passes. An estimated 80 percent of new hires are expected to choose a defined benefit.
There would be a 90-day window in which to make a decision on which option to take.
Vince Beltrami, president of the Alaska AFL-CIO, testified that the bill is about "restoring dignity, and expressing appreciation" for the value of state employees. He said it would allow public workers to retire "with dignity and respect" and not be a burden on other systems.
The measure, if passed, would take effect July 1, 2013.
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