Alaska House Votes to Delay Retirement System Overhaul

April 26, 2006 (PLANSPONSOR.com) - The Alaska House today voted 24-to-16 to delay implementing the new retirement plan for state employees, teachers and other government workers for one year.

The one-year delay approved today was proposed by Representative Mike Hawker, an Anchorage Republican, the Associated Press reported.

Lawmakers last year approved an overhaul of the state’s retirement system. Beginning July 1, it would have switched benefits from a traditional pension plan to a 401(k) savings plan in an effort to help a shortfall that was estimated between $5.7 billion and $6.2 billion (see Alaska Public Pension Plans Switching From DB to DC ).

Proponents said it was necessary to halt the financial drain from an overburdened pension system that still faces a $7 billion unfunded liability in its retirement system, according to the wire service.

Last year one representative called for an audit to investigate the drains on the state’s retirement system, to rule out criminal misconduct (see State Representative Asks for Alaska Pension Systems Audit ).

Hawker fears the plan will not meet the federal requirements necessary to be tax exempt.

The bill is House Bill 475 . The bill will now be transferred to the Senate.

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