US - Democrats in Alaska have stepped up campaigns to reinstate defined benefit (DB) pensions to public sector workers two years after state legislation converted public schemes to defined contribution (DC).
Democrats claimed the DC model used in the state public employee retirement system (PERS) and teacher retirement system (TRS) made it difficult for government departments to attract candidates.
Explaining the problem, Democrat Les Gara said: “The 401(k) plan works fine for very wealthy people and people who don’t plan on making a life here in Alaska, and that’s fine.”
Gara continued: “Hard working Alaskans should know they have the security of a pension plan to sustain them in their retirement years.”
Republican Mike Kelly, however, claimed the current system was more attractive to potential employees who lived in other states.
Kelly said: “To get them to come up here for a shorter commitment and then hopefully over time they’ll choose to stay here, is much more easily done with a pension plan which says ok, you put this much in, we’ll put this much in, and it’s yours from day one.”
In 2005, the Bush administration pressured states to sideline pension plans in favour of employee-funded retirement saving account plans.
Alaska made the change to its legislation, but reports quoted by state legislators showed little or no actual saving to state accounts.
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