Everyone seems so confused by Alaska’s Public Employees Retirement System, PERS.
Few people, if any, can really understand how any person or agency could acquire a retirement system that doesn’t pay for its own costs, therefore laying off $7 billion in unfunded liability debt for future Alaskans to pay. It would be like someone asking you if you would like a retirement plan that allows you to retire anywhere on the planet and live like a king. I think just about everyone would hit that bait.
That may sound tempting but go and add on that you don’t really have to totally pay for the plan. This is basically what you have with PERS. The fact that Alaska does not require its 161 participating PERS employers to pay for 100 percent of the system’s costs, automatically causes the system to either fail or eventually force a state bailout in the future.
The only reason the PERS system survives today is because the folks who owned the $7 billion feel their money is safe because Alaska has a permanent fund that can provide the possible future bailout. If a normal business or person were running a retirement system like this and not fully paying their bills, like Alaska’s 161 employers, the retirement plan would have been canceled long ago.
It is therefore obvious that PERS is currently paying its bills by writing checks that are underwritten by our permanent fund. If the books were balanced today, Alaska would lose a quarter of its permanent fund to the PERS. If they were balance 10 years in the future, Alaska would lose half of its permanent fund. Do you think every Alaskan fully understands what is happening to their permanent fund with regard to PERS?
It is understandable why every person in the state wants to be included in PERS. It is like standing on the sidewalk and shouting, “Free money.” How many folks do you think would show up for that free for all? Do you think this state free-for-all mentality could have anything to do with Alaska’s recent troubles involving other state employee benefits?
The PERS free for all needs an overhaul. The overhaul should require its employers to pay for 100 percent of the system’s cost.
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