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AARP Alaska feels just the opposite about the Senate bill to "fix" PERS and TRS than Commissioner of Administration Raymond Matiashowski. It is true, as the commissioner points out, that many private companies have switched from a defined-benefit to a defined-contribution plan. However, every employee of a private company participates in Social Security, which is, by design, a form of defined-benefit pension. Alaska's teachers, municipal employees and state employees do not have Social Security. If SB 141 is adopted, all we can offer future employees will be "social insecurity."
You cannot outlive Social Security. You cannot outlive a PERS/TRS defined-benefit plan. You can outlive a defined-contribution plan such as is offered by SB 141. What will our state do with 85-year-old retired teachers and police officers who have outlived their contributions and have no further pension and do not have any Social Security?
Is this a farfetched scenario? By no means. At age 65, the average male can expect to live another 14 years; the average female another 18. Half of us will live longer than that. Do we know what life expectancy will be in 30 years? In just the last year, life expectancy went up by three months. If we have advances in cancer research and combating cardiovascular disease, life expectancy could go up significantly, giving us many more years to outlive our defined-contribution plan.
Changing our public retirement system is serious business with serious consequences. Congress is currently engaged in a long-term look at how we should adjust Social Security to make it work in the future. They are not trying to solve this major public policy issue by May 10.
AARP encourages the Legislature to slow down and take the interim to hold field hearings throughout the state. Engage the employers and employees impacted and give them an opportunity to give their opinion. We have long-term funding problems with health costs and pensions - the entire country does. These problems can and should be addressed, but let's take our time and take it to the people. We can all work to resolve this together.
J. Patrick Luby, AARP Alaska