Retirement plan won't be optional

University workers to be exception to rule

Posted: Thursday, May 05, 2005

In the continuing debate over a plan that would create a new retirement system for future employees, the Alaska House on Wednesday rejected a proposal to make the plan optional for workers.

Senate Bill 141 would require all new teachers and public employees to take part in a "defined-contribution" plan in which they would not receive monthly pension checks but a lump sum upon retiring. A previous version of the bill asked current employees to boost their retirement contributions, but that provision was stricken.

An amendment suggested by Rep. Eric Croft, D-Anchorage, would give all employees the option to choose if they wanted to be on the new system or participate in the current plan, which is known as the "defined-benefit" program.

Florida offers both systems to its employees, Croft said.

Croft's amendment was narrowly approved with a vote of 21-19. But after lunch, lawmakers chose to reconsider the measure due to not knowing the full costs of offering both plans.

The second time Croft's amendment failed to get the necessary majority, tying at 20-20. Three representatives changed their minds: Kurt Olson, R-Kenai, voted in favor of it, and Jay Ramras, R-Fairbanks, and Mary Kapsner, D-Bethel voted against it.

"I felt like we had the lesser of two evils," said Ramras, who supports the bill under the condition that it is temporary and needs more refining.

The Senate applied pressure on the House last week when it suspended all meetings and threatened to leave the Capitol if the bill did not pass.

"Both bodies were pretty juvenile in the way they acted out, but I didn't feel any pressure today," Ramras said.

Earlier in the day, the House decided to allow future university employees the freedom to choose between the two plans.

But an amendment to offer the same choice for peace officers and firefighters was withdrawn, due to a lack of support.

On Tuesday, the lawmakers approved a measure that would make the new system limited to one trial year. They would be forced to examine the program's effectiveness.

In a related effort on Wednesday, lawmakers accepted an amendment that says legislators must approve a bill next year that makes some changes to the defined-contribution plan.

Wednesday was the House's last chance to alter its version of the bill. The chamber is expected to vote on SB 141 today.

Ramras said the bill should pass in the House now that it has the sunset clause.

"I call it a 'Band-Aid' but Alaskans call a 'duct tape' fix," Ramras said.

If the House approves the bill, a conference committee will discuss it again and either accept or reject the changes.

• Andrew Petty can be reached at andrew.petty@juneauempire.com



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