Alaska Senate Bill Would Increase Public Employee Retirement Plan Choice

The Alaska Senate is considering a measure that would give certain employees who participate in the Public Employees' Retirement System of Alaska and the teachers' retirement system an opportunity to choose between the defined benefit and defined contribution plans those systems offer. 

Senate Majority Leader Cathy Giessel (R-Anchorage) introduced SB 88 on March 1. 

Participation and Transfers. The bill provides that a teacher who was first hired after June 30, 2006, and before the effective date of that section, and who is a member of the teachers' retirement system DC plan may, before Nov. 1, 2024, make a one-time election to participate in the DB plan and transfer all contributions that have been made or should be made to the DC plan for service the member completes before the effective date of the member’s participation in the DB plan.

The transferred contributions shall be used to purchase credited service in the DB plan on an actuarial equivalent basis determined by the Alaska Retirement Management Board. 

The bill also includes provisions that would amend Alaska law to provide that an employee or former employee who first became a member of the plan before July 1, 2006, and who (1) received credit for service and (2) qualifies, may transfer those periods of employment to the plan. He or she also may receive credit for retroactive membership service for employment before June 5, 1988, if the employee or former employee met the requirements listed in the bill at the time of the employment.

Contributions. The measure also would amend Alaska law to provide that an employer that employs a member who first participates in the plan after June 30, 2006, shall contribute to the system every payroll period an amount equal to the greater of:

1. a per capita amount calculated by applying a rate, determined by the Alaska Retirement Management Board, of not less than 12% of the total monthly base salaries the employer pays to all members who first became members of the plan after June 30, 2006; or 
2. a per capita amount, determined by the board, that is equal to the amount calculated under (a) of this section expressed on a per capita basis. 

It also provides that the board could increase the percentage rate; however, the increase must be based on a concurrent increase, if any, in the member contribution rate. 

Retiree Health Benefits. The bill would establish the State of Alaska Teachers’ and Public Employees’ Retiree Health Reimbursement Arrangement Plan for teachers who first become members of teachers' retirement system after June 30, 2006, and employees of the state, political subdivisions of the state, and public organizations of the state who first become members of the Public Employees' Retirement System of Alaska after that date.

Employee Elections. Employee elections would have to be made in writing on one or more forms and in the manner prescribed by the administrator. Before accepting an election to participate in a DB plan, the administrator shall provide the employee who plans on making an election to participate in a DB plan with information, including calculations to illustrate the effect of moving the employee’s retirement plan from a DC plan to a DB plan as well as other information that informs the employee of potential consequences of the employee's election. Further, such elections would be irrevocable.

Status. SB 88 is before two Senate committees: (1) Labor and Commerce and (2) Finance.