Return to a secure retirement for Alaska’s educators and other public employees

Return to a secure retirement for Alaska’s educators and other public employees

In 2005, during a politically charged special session, the Alaska Legislature, under pressure from the Murkowski administration, dismantled the public employee retirement pension and health care systems.

These were replaced with a defined contribution savings account, and an expensive and possibly non-existent retiree health plan. Overnight, Alaska went from having a fair and secure retirement system to having one of the worst retirement systems in the country.

Alaska is one of only 12 states in the nation that does not offer Social Security to its public employees. Social Security is a pension and offers a retirement benefit that cannot be outlived. Without Social Security or a defined benefit state pension, there is no safety net for retirees.

NEA-Alaska and its partners in the Alaskan Public Pension Coalition advocate returning to a defined benefit pension system with access to affordable health insurance. Consider: The state’s actuaries show the cost differences between the former defined benefit retirement security and the new defined contribution retirement savings account to be negligible if you consider recruitment and training costs for a more transient work force.

Without the retirement incentive to stay and build a life in Alaska, the state is losing its best and brightest to the Lower 48, where most public employees have a pension. The portability provision in Alaska’s new plan actually encourages trained and experienced public employees to leave the state once they are vested.

Alaska cannot afford to become a training ground for the Lower 48.High turnover means constant dollars spent on recruiting and training the next set of revolving door employees. Alaska-based police and fire fighters report recruitment and training costs in excess of $100,000 per employee.

In 2006 retiree pensions contributed more than $1.6 billion to the Alaskan economy, which generated more than 11,700 jobs. Without the predictable income that pensions provide, many retirees will leave the state, and Alaska’s economy will suffer. Returning to a defined benefit retirement system will not increase the state’s unfunded liability, according to the state’s actuaries, because the two systems cost virtually the same.