Bill Would Allow Alaska Public Employees to Switch to DB
January 27, 2012 (PLANSPONSOR.com) – A bill that will allow Alaska public employees to choose between a 401(k)-like retirement account or a traditional pension is being considered in the state legislature.
According to The News Tribune, the bill, SB121, 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.
State Senator Bill Wielechowski, a co-sponsor of the bill, 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.
The measure was heard by the Alaska Senate State Affairs Committee. At least half of the Senate signed onto it.
The articles states that there are an estimated 13,000 employees between the public employees’ and teachers’ retirement systems. Approximately 60% who are currently in defined contribution programs are expected to switch if the bill passes. An estimated 80% 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.
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