Since 2006, Alaska has made great strides in addressing the unfunded liability of the state-administered pension funds. The state was a trailblazer at the time for ending defined benefits options for new state employees and instead providing them with defined contribution plans. The current pension plan is 76 percent funded, compared to 65.7 percent in 2020 and even less in 2006. But most years aren’t going to experience the positive investment returns that have happened recently, and the legislature is now considering taking three steps back by going back to defined benefits plans for certain employees. Returning to risky defined benefits plans is a huge financial risk that Alaska cannot afford. A new backgrounder and recent testimony by Reason Foundation explain more about the details of the proposed changes and why they would put Alaska on the hook for an enormous amount of debt.
On January 28, Ryan Frost at Reason Foundation submitted written testimony to the Senate Labor and Commerce Committee of the Alaska state legislature on HB 55. The statement he provided is below.
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