Alaska is currently facing a shortage of public sector workers, including teachers and public safety employees, due to the lack of defined benefit (DB) pension plans and Social Security participation. To address this workforce crisis, Alaskans are considering a return to pensions for public workers. This move would require current employees to choose between a pension or savings plan, as well as decide whether to use their existing savings to purchase past service credits in the pension plan.
The Alaska Retirement Management (ARM) Board would be responsible for crafting and implementing the new retirement benefit structure if the state were to transition back to pensions. Drawing on insights from states like Wisconsin and South Dakota, the board would aim to create a benefit system that is both affordable and sustainable. Lessons from the South Dakota Retirement System (SDRS) highlight the importance of reviewing retirement plan returns and asset levels annually to ensure stable costs over time.
A return to pensions would involve aligning the interests of stakeholders such as employees, retirees, and taxpayers to ensure the successful funding of the pension plan. By fostering a collaborative environment where incentives are well-aligned, Alaska can establish a robust and resilient retirement system. The proposed retirement plan aims to strike a balance between employer, retiree, and employee risks, upholding the state’s commitment to supporting public workers while maintaining fiscal responsibility.
While the impact of reintroducing a pension plan on worker retention remains uncertain, the option offers hope for improving workforce and retirement challenges. Companies spend significant amounts on employee benefits to retain workers, and the potential return to pensions suggests that Alaska may see improvements in retention rates. The benefits of pension plans in supporting workforce stability and addressing retirement challenges are evident, and Alaskans are hopeful that a return to pensions could help address the state’s current workforce crisis.
