Alaska Senate Refused Delay in Retirement Plan Overhaul

May 8, 2006 ( - The Alaska Senate passed a bill meant to iron out some of the problems with legislation creating a new pension plan for state workers, based on a 401(k) type plan rather than defined benefits.

The Senate version of the bill does not include a one-year delay in implementing the new plan – a provision that was added in the House the Associated Press reported.

The overhaul means replacing the state’s DB retirement system with a 401(k) type savings plan in an effort to cushion the system’s estimated $5.7 billion to $6.2 billion shortfall (See Alaska Public Pension Plans Switching From DB to DC ). The House voted in April to delay the switch (See  Alaska House Votes to Delay Retirement System Overhaul) claiming that more time was needed to make sure the plan was fixed and that it would meet federal tax exempt requirements.  

The provision was removed in the Senate Finance Committee, with some senators arguing that further delay would only stall the problem, the wire service reported. Senator Bert Stedman said that the new plan would come to $4,800 per public employee, totaling $21 million and $14,900 per teacher.

The new Senate version of the bill will have to be approved by the House or a committee must be appointed to hammer out the differences.