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

More in News

A Princess Cruise Line ship is docked in Juneau on Aug. 25, 2021. (Michael Lockett / Juneau Empire File)
Ships in Port for the week of May 22, 2022

Here’s what to expect this week.

Coast Guard aircrews medevaced two people from Dry Bay Airstrip, approximately 30 miles Southeast of Yakutat, Alaska, after their plane crashed, May 25, 2022. (Courtesy photo / Coast Guard District 17)
Three medevaced after plane crash near Yakutat

All four aboard were injured, three critically so.

The author’s appreciation for steelhead has turned into something like reverence considering what’s happening to populations in the Lower 48 and Canada. (Jeff Lund / For the Juneau Empire)
I Went to the Woods: Silent steel

“You forget most of what ends up in the freezer, but those steelhead, they stick with you.”

Senate President Peter Micciche, R-Soldotna, seen here in this June 16, 2021, file photo, announced Wednesday he will not seek relelection in the Alaska State Senate, where he has served since 2013. (Peter Segall / Juneau Empire file)
Senate president says he won’t run again

“Honor and a privilege.”

Hoonah’s Alaska Youth Stewards helped make improvements to Moby and water the plants in summer 2021. (Courtesy Photo / Jillian Schuyler)
Resilient Peoples & Place: Moby the Mobile Greenhouse cultivates community

It presents opportunities to grow food knowledge and skills.

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, May 26, 2022

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

Gavel (Courtesy photo)
Alaska Supreme Court orders use of interim map for elections

The decision came just over a week before the June 1 filing deadline for the August primaries.

Most Read