Alaska House passes new pension plan

The Alaska House of Representatives passed a bill on Monday to create a new pension plan for state and municipal workers. The vote was close, with 21 in favor and 19 against. If the bill becomes law, it will be the first time since 2006 that Alaska has offered a pension plan to public employees. The state eliminated pensions that year and switched to a 401(k)-style retirement system. Supporters of the bill say the current system makes it hard to hire and keep workers. They argue that a pension plan will save money in the long run by reducing turnover and training costs. “We are burning bonfires of money,” said House Majority Leader Chuck Kopp, R-Anchorage. “What we’re doing now is staggeringly expensive.” Opponents worry about the cost of the new pension plan. They say it is difficult to predict future expenses like rising health care costs. “We cannot predict the future,” said Rep. Justin Ruffridge, R-Soldotna. “Until we can have a hard conversation about the costs and use fiscal constraint around the cost over time, it’s really hard to support this at this time.”

Alaska adopts new pension plan

The bill now goes to the Senate for consideration. Senate Majority Leader Cathy Giessel said the Senate likely won’t vote on it before the end of the regular session next week. “We simply don’t have time the rest of this year,” Giessel said. If passed, the new pension plan would cost around $600 million over the next 14 years, or about $40 million annually. Current state employees could choose to switch from the 401(k)-style system to the pension plan. The bill addresses recruiting and retaining public workers in Alaska since pensions were eliminated. Some school districts have had to hire teachers from other countries, and state troopers and corrections officers often rely on overtime. Governor Mike Dunleavy has not yet taken a position on the legislation. Lawmakers have limited time to consider or change the bill before the regular session ends on May 21.