This pension plan would cost Alaska $9 billion

New pension proposals could result in new income or sales taxes for Alaskans.

Alaska transitioned state employees to a Defined Contribution (DC) retirement plan from a Defined Benefits (DB) plan in 2005, after the state accrued a sizable amount of debt and could no longer afford the earlier pension system. The basic difference between these plans is what they promise to participants. A defined benefit plan specifies exactly how much retirement income employees will get once they retire. A defined contribution plan only specifies what each party–the employer and employee–contributes to an employee's retirement account, similar to a 401(k)-style retirement system. For several years, there has been a push to return to the unaffordable DB plan for state employees.

A return to a defined benefit (DB) pension plan could further cost Alaska upwards of $9 billion in unexpected expenses. These pension proposals could mean that Alaska would, for the first time, have either a sales tax or an income tax. Alaska still owes more than $6.9 billion in unfunded liabilities from a previous defined benefit plan.

Simply put, we cannot afford a return to a defined benefit pension plan.

Paid for by Americans for Prosperity - Alaska, Anchorage, AK. Bethany Marcum, State Director, approves this message.