The Alaska state Senate has approved a bill that would lead to a major overhaul of the state's pension system if passed. The measure would raise contributions for current state employees from 6.8% and create a defined contribution plan for future employees. The state would contribute 4.5% of employees' salary to individual employee accounts that would be commingled and invested like a 401(k) plan, along with an additional 1.75% for medical insurance and 2% for a new health reimbursement fund. The state contribution would eventually rise to 9.8%; employees would contribute 8% of their salaries. The bill would also combine the three state retirement boards into one, to be called the Alaska Retirement Management Board.
The bill, passed by the state Senate Monday, will go to the House State Affairs Committee, according to Miles Baker, an aide to state Sen. Bert Stedman. "Based on our conversations, we expect them to take our bill and make some modifications to it and put it out to the full House," he said.
There is likely to be considerable contention in the House over the bill, according to Janet Seitz, an aide to House Rules Committee Chairman Norman Rokeberg. "The comments I've heard indicate there is some concern over the bill."
The main concern over the bill, according to Melanie Millhorn, director of the state's division of retirement and benefits, "is the philosophical question (of) what type of benefit plan should the state of Alaska provide: a defined benefit plan or a defined contribution plan."
