Revamping retirement options for Alaska’s public sector is “a two-year project,” state Senate and House majority leaders stated on Tuesday, suggesting that a new pension bill is unlikely to be adopted before the current legislative session concludes next month.
The bipartisan coalitions of the House and Senate both identified pension reform as one of their primary policy goals when they formed late last year, amid ongoing recruitment and retention challenges facing the public sector in Alaska.
Senate Majority Leader Cathy Giessel, an Anchorage Republican, has been advocating for a new defined benefit plan since 2023.
This plan would ensure income for retirees from Alaska’s public sector employers, including the state, school districts, and law enforcement agencies, a significant change since the previous defined benefit plan was discontinued in 2006.
In 2023, the Senate adopted Giessel’s bill, only for it to remain stagnant in the Republican-controlled House.
As of now, Giessel mentioned that the Senate is awaiting action from the House regarding the bill.
House Majority Leader Chuck Kopp, also from Anchorage, indicated on Tuesday that despite pension reform remaining a priority for his caucus, progress on the legislation has been hindered by several factors, including a prolonged debate on the operating budget in the House Finance Committee.
Back in February, Kopp expressed confidence that the bill would be voted on by the full House by the end of March.
However, March has come and gone, and the bill still awaits consideration in the House Finance Committee.
On Tuesday, Kopp indicated that he anticipates House Bill 78—which aims to establish a new defined benefit program for public sector workers—to reach the full House for a vote by the first week of May.
Alaska terminated its previous defined benefit plan for new public sector workers in 2006 due to an unfunded liability exacerbated by inaccurate actuarial analyses.
Now, nearly 20 years later, the state continues to address its debts associated with the old plan.
Since that time, Alaska has provided its teachers, police officers, firefighters, and other public sector workers with access to a defined contribution plan similar to a 401(k).
Under this structure, workers can contribute to an investment account without having the option for guaranteed income from the state upon retirement.
This shift has left many public sector workers in Alaska struggling to save enough to retire securely.
Additionally, Alaska stands out as the only state in the U.S. that neither offers its teachers a pension nor provides access to Social Security.
Leaders of public sector unions and agency heads assert that the absence of a defined benefit offering is a key factor in the recruitment and retention crisis, which has resulted in high vacancy rates across school districts, state agencies, and law enforcement.
Jesse Slone, a data analyst for the Alaska Department of Corrections and a union representative, voiced his support for restoring pensions for state employees during a recent hearing.
He noted that individuals hired before the state discontinued pensions—like his relatives—“aren’t wealthy, but they have what so many in my generation fear that they won’t: a dignified, stable retirement.”
Slone added, “Some say young people don’t want pensions, but when I’ve repeated that line to recent graduates, they’ve literally laughed at my face.
That belief that hard work should be honored—it isn’t outdated.”
However, disagreements about whether implementing a new pension system will alleviate Alaska’s recruitment and retention issues persist.
Republican members of the House and Senate minorities have largely opposed the initiative to reintroduce pensions, citing concerns over new unfunded liabilities or costs that the state may not be able to sustain amid reduced revenue forecasts and hesitance to impose new taxes.
A recent actuarial analysis presented to the House Finance Committee earlier this month projected the bill could cost up to $580 million over a 14-year period, averaging around $40 million per year.
Kopp claimed that this expense could ultimately be offset by savings from the decreased need for hiring and retention bonuses, which the state has been compelled to offer in key sectors, including to correctional officers, state troopers, and workers who manage food assistance applications.
He further argued that the state would likely save money by reducing the costs associated with frequently hiring and training new employees.
“The costs of doing nothing are dramatically higher than what’s being presented in this bill,” Kopp stated.
He explained, “It compares favorably with the projected savings to the state, which is $76 million a year in savings just from reduced lost training dollars, along with the costs of turnover, recruitment, rehire, and retraining.”
Past attempts to restore a pension plan have failed in the House or Senate.
However, Kopp expressed optimism that over time, improving public sector retirement benefits has gained traction and garnered support among both voters and elected officials.
Kopp secured his seat last year against incumbent Rep. Craig Johnson, making public pensions a centerpiece of his campaign.
It’s important to note that the defined benefit plan under consideration this year differs from the pensions Alaska had until 2006.
Kopp and Giessel emphasized that their proposal would require Alaska workers to share the burden if the retirement plan becomes underfunded.
Furthermore, this new plan does not include health insurance for retirees nor provide a cost of living adjustment for those who choose to remain in Alaska.
These modifications have raised concerns among some Alaskans.
During a recent round of public testimony before the House Finance Committee, although most speakers expressed support for a return to defined benefits, some worried about the plan’s specifics as outlined in House Bill 78.
Danielle Redmond, a former retirement counselor for the state, voiced her concerns regarding the absence of medical benefits—known as AlaskaCare—included for retirees in the new pension initiative.
“I can’t tell you how many retirees told me it was even more important to them than the money,” she said.
“I can get a 401(k) plan anywhere, but retiree medical was key for many of the members that I talked to.”
Redmond, who does not qualify for a pension as she was hired by the state post-2006, expressed uncertainty about how she would decide “if forced to choose between a pension plan or health care.”
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