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Legislature Passes Modest Defined Benefit Pension Plan for Public Employees
Reestablishing a Public Pension Fulfills Senate Majority Priority
JUNEAU, AK – Yesterday, the Senate passed House Bill 78, reestablishing a defined benefit retirement plan for teachers, public safety officers, and public employees, by a vote of 12-8. Today, the House of Representatives concurred with the Senate version. House Bill 78, sponsored by the House Finance Committee, is a fiscally responsible path to recruit and retain public employees by providing a modest pension plan with structural safeguards, including adjustable contributions and shared risk provisions that ensure the plan remains fully funded without creating unfunded liability for the state.
“Behind every unfilled position in Alaska is a classroom without a teacher, a community without a trooper, and a family without the services they were promised. Behind every position we do have filled is a public servant we cannot afford to lose,” said Senate Majority Leader Cathy Giessel (R-Anchorage), sponsor of the Senate version. “Extensive analysis shows this is a responsible pension plan that more than pays for itself in savings on training and overtime costs. Built on shared risk and years of actuarial review, economic analysis, and listening to Alaskans, this is a fiscally sound pension our communities and public servants can trust — and its automatic adjustment mechanisms ensure it stays that way.”
Alaska has faced a detrimental recruitment and retention crisis for over a decade. Since the state shifted away from its defined-benefit pension system in 2006, public employers have struggled to compete with the private sector and other states that offer better pay and benefits. The high cost of turnover, constant recruiting, and training workers who leave state service has added up to an estimated $640 million for the state.
"For years, Alaska tried to make a broken system work. Year after year we've seen public servants leave because we couldn't offer them a secure retirement and reasonable pay," said Senator Jesse Kiehl (D-Juneau). "This bill makes government more efficient and effective by giving public employees the stability to build careers here and set deep roots in Alaska.”
“Thousands of Alaskans commit their careers to public service to keep our neighborhoods safe, our youngest generation educated, our communities healthy, and our roads plowed. Those employees deserve to retire with dignity,” said Senate Rules Chair Bill Wielechowski (D-Anchorage). “This is not just a fix to the state’s employee vacancy issues; it’s a solution for Alaskans so they can keep their roots in the communities they love and grow their families for generations. This is a promise that we owe to every single dedicated public servant.”
Under HB 78, current employees may opt into the new defined benefit plan or remain in their existing defined contribution plan. New employees will have the same choice. The plan features a tiered pension calculation, a five-year vesting period, health reimbursement accounts, Post-Retirement Pension Adjustments to protect against inflation, and disability and death benefits.
House Bill 78 now heads to Governor Dunleavy for consideration.
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