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Retirement plans could soon get funding increase

Posted: February 1, 2012 - 9:34am

Top legislators are saying Alaska needs to put some of its huge savings into its underfunded retirement plans, but have yet to reach agreement on how or how much.

Senate Finance Committee Co-chairman Bert Stedman, R-Sitka, last week recommended the state use some of its available billions to pay down Alaska's $11 billion in unfunded liability for its Public Employee Retirement System, or PERS, and Teacher Retirement System (TRS).

He recommended the state contribute "north of $1 billion and probably south of $4 billion."

The unfunded liability is the difference between what the state expects the money now in the retirement trust funds to be worth in the future, and the amount of benefits it will have to pay.

Under state law, the budget each year must pay down a portion of the unfunded liability so it is eventually paid off, an amount now in the hundreds of millions a year.

Stedman said that contribution would "help the future operations of the state by lowering the contribution needed to the unfunded liability (by) the operating budget."

House Speaker Mike Chenault, R-Nikiski, Monday said he's likely to support something like that, suggesting an amount in Stedman's range.
He called $2 billion "maybe the top end we'd put into it at this point in time."

Either amount would be good news for the state, said Sen. Dennis Egan, D-Juneau, who has been seeking to strengthen the retirement plans.

"Two billion dollars at least, but I'll take anything," he said.

"Anything that goes into the retirement system is going to help us," he said.

That's because the money won't be needed for years, and will likely earn substantial investment returns over time.

"The more money that goes into the fund, we make money in the end, or at least save it," he said.

Chenault was skeptical, however. During the recent market decline, the Alaska Permanent Fund and his own personal portfolio both declined, but then they went back up when the stock market rebounded while the state's retirement savings did not.

"PERS and TRS went down and I haven't seen where it's come back up yet," he said.

Chenault questioned the management of the PERS and TRS trust funds asking, "why theirs went down and stayed down."

That's not the message that Department of Revenue Commissioner Bryan Butcher gave the Legislature, however.

Earlier this year he told the House Finance Committee the state's Treasury Division, which he oversees along with the Alaska Retirement Management Board, actually exceeded the Alaska Permanent Fund's investment returns last year.

And the Permanent Fund's returns of more than 20 percent were themselves stellar.

One concern some lawmakers have with contributing billions to the funds is actually overfunding he plans, Egan said. That can lead to unsustainable benefit increases or contribution reductions.

One solution there, Egan said, is a plan by Sen. Johnny Ellis, D-Anchorage, to put the extra contribution in a special fund where its earnings could be used to reduce the unfunded liability only so long as it is needed.

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spwright 02/01/12 - 02:12 pm
Employees PAID Their Share 2/1/12

Wed. 2/1/12
I just want to make the Point :
Public Employee Retirement System PERS
Employees have already PAID THEIR FAIR SHARE.
Money was deducted from each & every PayCheck every Month for decades.
So this Huge MESS of Under Funded Retirement System is NOT the fault of the PERS Employees We Did Our Share.


AliceS 06/19/12 - 11:40 pm
There are a lot of countries

There are a lot of countries with better retirement system. But what's the use of talking about them? Americans over 50 cannot relocate and start over in any of these countries (facing competition from younger local employees and, in many cases, language and cultural barriers.) We here should stop killing our Unions and instead of tightening everybody's belts finally go for the belts of the fattest 1%

Raoulduke 06/20/12 - 10:03 am
Always spending

I really appreciate the north of $1 billion,but south of $4 Billion.I don't now about you out there,but couldn't there be a better approximation?This has been the scenario.Politician's have no bills.The Politician has an enormous surplus.The next month the Politician cries for more money,because they are broke.Is it me,or does this state not need an INDEPENDENT AUDITOR?An auditor not recommended by anyone in public office i.e. Governor.The Auditor should have the power to go into any department at anytime ,and have the people leave the department office.Leave their keys,and have their filing cabinets open,and computers turned on.The auditing system that is in place now for this state is a joke.The auditor is told when ,and what department to audit by the governors office.This I truly believe allows the state to set the books in a positive light.Alaska by history Well the last forty years has been in the top two of political corruption.Very few positions are voted on.A great many office holders are either appointed,or come in on someone else's coat tail.With this type of auditing system.I bet there would be less millionaire state politician's after they finish their term in office.There would be MORE TRANSPARENCY.This system has worked very in Indiana,and many other states.Alaska has way to much money to not keep a closer watch.What do you think?

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