Senators French and Egan Urge Governor to Use Mercer Proceeds to Fund Pensions for Public Employees(JUNEAU) - Senator Hollis French, D-Anchorage, and Senator Dennis Egan, D-Juneau, wrote Governor Sean Parnell, asking him to help re-establish the "defined benefits" system of retirement for public employees.
"Alaska is the only state in the union that doesn't offer our public employees defined retirement benefits," said Senator French. "Our recently-enacted 'defined contributions' system is not fair to our workers, and is bad for the economy."
Previously, public employees who contributed to the Public Employee Retirement System (PERS) or the Teacher Retirement System (TRS) were provided a pension in their retirement years from those systems. This ended when legislation passed to eliminate that benefit for all new public employees. Under the new plan, workers now pay into retirement accounts, and take on all the risks of managing investments.
"Retirees contribute more than $1.5 billion a year to Alaska's economy," said Senator Egan. "The defined benefits system encouraged employees to stay in Alaska and retire here. That's not the case with the new program."
Senator French said that one of the reasons given by supporters of changes to the system was that the state was facing a large liability in the future. He said a big piece of that liability was created by the flawed work of Mercer, the state's former actuarial adviser. The state filed suit against the company.
French and Egan said the potential settlement presents an opportunity for Alaska to restore the prior defined benefits system and bring the state in line with the rest of the nation. "It appears there will be a large settlement in the not too distant future," French and Egan told the Governor in their letter. "We urge you to use the proceeds from the Mercer lawsuit as a down payment on a return to a secure retirement for public employees."
Posted: March 2, 2010
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