Employees say lack of pension hurts state

Posted: Wednesday, March 19, 2008

Some fear Alaska's state government made its retirement problem worse, not better, when it adopted a controversial new system that began in 2006.

One of those is Anchorage teacher Jake Todd, 25, who came to Juneau to tell the Legislature the new 401(k)-style retirement plan wasn't working to either recruit or keep teachers in Alaska.

He said the other 49 states have retirement plans that are better than Alaska's and can help them hire away the state's teachers.

"They're looking pretty good right now," he said.

Sen. Kim Elton, D-Juneau, has proposed doing away with the defined contribution plan the state adopted for new teachers and public employees in 2005, and replacing it with a traditional defined benefit plan.

Elton's Senate Bill 183 would go back to the old system and was the subject of a hearing in the Senate State Affairs Committee on Tuesday.

The Alaska Public Pension Reform Coalition, made up of a number of longtime state employees and union leaders, testified the new system was exacerbating the problems Todd addressed: attracting talented people to state employment and keeping experienced, knowledgeable workers.

"The (defined contribution) plan is not working for Alaska and its public employees," said Jim Duncan, business manager for the Alaska State Employees Association.

Deputy Commissioner of the Department of Revenue Kevin Brooks said it was "too soon to say" if the new defined contribution plan was really having the effects claimed.

"We just implemented this defined contribution plan about 20 months ago," Brooks said. "We've heard a lot of anecdotal evidence that it's affected recruitment, but we're continuing to hire people," he said.

While turnover among state employees remains, Brooks said that may be due to issues other than retirement, such as pay.

"Nobody's seen a cost of living adjustment in a couple of years," Brooks said.

The majority of state employees now have pay increases coming by July, thanks to newly negotiated contracts, he said.

Rob Claus, a Klawock-based trooper nearing retirement, is training a promising replacement, but he fears that family and other ties would pull that trooper away from Alaska when he was vested in the new retirement system.

A defined benefit plan can counter that pull and keep trained people in Alaska, he said.

Sen. Con Bunde, R-Anchorage, a former teacher, said it was pay, not retirement, that was of most concern to him and many other employees.

"Wages are more important than any 30-year away retirement," he said.

Claus said he chose state service, but his brother is job-hopping in the business world, taking his 401(k) with him. But he also is paid $300,000 a year.

"I really don't think the state wants to get into that kind of bidding war," Claus said.

Todd said the retirement plan means state employees will have to not only be skilled at the job the state hired them to do, they'll also have to become investment experts if they are to be ensured a good retirement.

"I'm not a financial planner, and I don't really care to be one," he said.

The state began looking at the problems with its retirement systems when projections of future costs showed the state's savings falling well short of being able to pay for them.

"The state was no longer able to keep up with the unfunded liability of the defined benefit plan," said Sen. Lyda Green, R-Wasilla. She is member of the State Affairs Committee, as well as Senate president and a supporter of the new retirement system.

Elton said his bill was fair to employees and would help attract good employees. The cost to implement it would be slight, he said, because abandoning the defined benefit plan didn't actually save the state any money.

• Contact reporter Pat Forgey at 586-4816 or patrick.forgey@juneauempire.com.

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