A measure to create a new defined benefits pension plan for public safety employees cleared its first of four Alaska House committees Thursday, in a telling step for the legislation’s fate in a divided chamber.
A measure to create a new pension plan for public safety employees passed its first hurdle in the Alaska House on Thursday, in a telling step for the legislation’s fate in a divided chamber.in a 4-2 vote. Conservative Republicans Rep. Kevin McCabe of Big Lake and Rep. Tom McKay of Anchorage opposed the measure, citing fears of ballooning costs for the state.
At the time of the 2006 decision, lawmakers were driven in part by incorrect actuarial information provided by a firm contracted by the state, to the tune of around $2.5 billion. A lawsuit ensued, resulting in a $500 million settlement payment to the state. But by some accounts, the damage was already done: many lawmakers were left with the impression that the state simply could not afford the risk of providing public employees with a defined benefit option.
Mack said that as a firefighter with no access to Social Security and an underfunded retirement account, his likelihood of having enough money in retirement is slim. A new defined benefits plan would create “a shared risk solution” where some of the risk that currently falls to the individual employee would be shared with fellow employees and the state, so no single person’s bad investment decisions could take away that person’s ability to retire “with dignity.
“Some of the comments around the amendment are that our police or public safety employees would potentially willingly put people in danger in order to personally benefit or get more money in retirement,” said Justin Ruffridge, a Soldotna Republican who has in the past spoken in favor of revamping the state’s retirement system.
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