A bill that would have reinstated a defined benefits plan for some public employees has failed to make it through the Alaska Senate before the Legislature gaveled out for the year.
The bill, HB 55, would have restarted a plan for firefighters and peace officers, which was introduced as a method to recruit and retain public safety officers and replace the current defined contribution plan with a set pension, similar to the one that existed before 2006 in Alaska.
Americans for Prosperity Alaska State Director Bernadette Wilson said the bill dying was a victory for fiscal responsibility. Her group had raised the alarm over the likely costs for returning to a pension plan, when the previous plan has not yet been paid down. Her group counts this as a win, after volunteers made hundreds of calls to lawmakers asking them to vote no.
The bill, pushed by public sector unions, was flawed by many accounts. According to the Equable Institute, the plan provided slightly worse retirement benefits for most Alaska peace officers and firefighters, compared to the current defined contribution plan.
More about the score the Equable Institute gave HB 55 here.
The Equable Institute also said:
- Short-term workers would likely be worse off under the proposed retirement plan.
- Medium-term workers could be slightly better off under the proposed plan than the current plan depending on personal factors in their career; but even if they are the proposed plan’s value is below common standards for adequate retirement income. The proposed plan does not meaningfully improve retirement security prospects for medium-term workers.
“Because the proposed pension plan does not provide meaningfully better benefits, it is unclear whether adopting HB55 would achieve the stated goal of its proponents to improve retention,” Equable said. “Most academic literature suggests that few individuals join public service because of the retirement benefits, and other factors like salary, health benefits, and working conditions are stronger factors for retention than retirement benefits (no matter the plan design).
If the public employee unions want to push the effort to return to defined pensions, they’ll need to reintroduce legislation next year, as HB 55 is now dead.