Kito and Egan propose new pension system for longtime state employees

Juneau’s two Democratic delegates to the Alaska Legislature are pushing a proposal that would allow younger state employees access to a guaranteed pension system. The move is being proposed as a way to save money and reduce turnover among public workers.

“Basically, what this bill does is provides an opportunity,” Kito told the House State Affairs Committee, which approved House Bill 280 on Thursday morning.

The bill creates a new “defined benefit” retirement program for public workers who stay with the state for many years. In recent years, the state has gone away from defined-benefit, pension-style plans and toward 401(k)-style “defined contribution” retirement plans.

The 401(k) approach is cheaper but less secure for employees, and there’s little disincentive to keep employees from quitting. The state switched to the defined contribution approach after Alaskans began living longer than actuaries expected, and costs soared, creating a multibillion-dollar unfunded pension liability.

The state fixed its system of estimates, and the system now proposed by Kito and Egan is a hybrid approach that incorporates lessons learned.

Instead of paying 6 ¾ percent of income, employees will pay 8 percent of income to enter the plan. They also will be more responsible for health care costs, paying a monthly premium. The state’s older pension system covered health care costs without a premium.

Employees also have to work longer to become vested: 5 years for financial benefits and 10 years for health care benefits.

“There will be a shared risk at this point as opposed to having the employee pick up 100 percent or the state pick up 100 percent,” Kito said.

Kito’s proposal is co-sponsored by Rep. Cathy Muñoz, R-Juneau, and three other House Republicans. Rep. Chris Tuck, D-Anchorage, has also co-sponsored the bill.

Sen. Dennis Egan, D-Juneau, has introduced companion legislation in the Senate. Senate Bill 88, co-sponsored by five other senators, received its first hearing in the Senate Community and Regional Affairs Committee on Thursday. The committee lacked a quorum to move the bill forward.

• Contact reporter James Brooks at james.k.brooks@juneauempire.com.

More in News

This undated electron microscope image made available by the U.S. National Institutes of Health in February 2020 shows the Novel Coronavirus SARS-CoV-2, yellow, emerging from the surface of cells, blue/pink, cultured in the lab. Also known as 2019-nCoV, the virus causes COVID-19. THE CANADIAN PRESS/AP, NIAID-RML
COVID at a Glance for Thursday, Dec. 2

Numbers come from reports from the City and Borough of Juneau Emergency… Continue reading

A man missing for more than 40 years was identified by the Alaska Bureau of Investigation as a Chugiak resident who was last seen in 1979 before being discovered murdered years before on an island near Anchorage in 1989. (Courtesy photo / Alaska Department of Public Safety)
Body found in ’80s ID’d with DNA analysis

The body, found in 1989, had been unidentified until now.

teaser
Planet Alaska: Visiting the ancestors through glimpses of glyphs

We live in Tlingit Aaní on Kaachxaan.akw’w where our petroglyphs are a symbol of home.

It's a police car until you look closely and see the details don't quite match. (Juneau Empire File / Michael Penn)
Police calls for Thursday, Dec. 2, 2021

This report contains public information from law enforcement and public safety agencies.

This undated electron microscope image made available by the U.S. National Institutes of Health in February 2020 shows the Novel Coronavirus SARS-CoV-2, yellow, emerging from the surface of cells, blue/pink, cultured in the lab. Also known as 2019-nCoV, the virus causes COVID-19. THE CANADIAN PRESS/AP, NIAID-RML
COVID at a Glance for Wednesday, Dec. 1

Numbers come from reports from the City and Borough of Juneau Emergency… Continue reading

This undated electron microscope image made available by the U.S. National Institutes of Health in February 2020 shows the Novel Coronavirus SARS-CoV-2, yellow, emerging from the surface of cells, blue/pink, cultured in the lab. Also known as 2019-nCoV, the virus causes COVID-19. THE CANADIAN PRESS/AP, NIAID-RML
COVID at a Glance for Tuesday, Nov. 30

Numbers come from reports from the City and Borough of Juneau Emergency… Continue reading

The Pebble deposit lies at the headwaters of Bristol Bay, the greatest salmon fishery in the world. (Courtesy Photo / Colin Arisman)
Pride of Bristol Bay: Permanent protections in view for Bristol Bay

By Bjorn Dihle For more than two decades, those who care about… Continue reading

It's a police car until you look closely and see the details don't quite match. (Juneau Empire File / Michael Penn)
Police calls for Wednesday, Dec. 1, 2021

This report contains public information from law enforcement and public safety agencies.

This photo shows a raven in the snow. (Courtesy Photo / Kerry Howard)
On the Trails: Transition to winter — maybe

A mat of old leaves lined the roadway, each leaf fringed with crystals, making a pretty mosaic…

Most Read