Alaska Auto-IRA Bill Lets Workers Save PFD for Retirement

The Alaska Legislature passed Senate Bill 21, establishing the Alaska Work and Save Program. The program allows private-sector workers to automatically deposit their Permanent Fund Dividend checks into retirement accounts. The bill now awaits the governor's signature.

Senator Bill Wielechowski, D-Anchorage, Representative Mia Costello, R-Anchorage, and Representative Dan Saddler, R-Chugiak, sponsored the legislation. The program integrates with the existing Pick.Click.Give program. Workers can direct their annual dividend into retirement savings.

The program targets roughly half of Alaska's private-sector workers who lack employer-sponsored retirement plans. Employees are enrolled automatically, with contributions deducted from each paycheck. Workers retain the right to opt out at any time.

Employers forward payroll deductions but are not required to contribute to employee accounts. Representative Costello said small businesses testified that the program allows employees to save automatically at no cost to employers.

Alaskans aged sixty and over are expected to double between 2010 and 2030. The average monthly Social Security benefit is $2,071. The average monthly cost of living in Alaska is $4,528.

Senator Wielechowski said seniors are relying more on SNAP, falling below the poverty line, and struggling to get by on Social Security, which does not come close to covering Alaska's cost of living. The bill gives workers an automatic way to save and costs employers nothing, he said.

Seventeen states have established comparable state-sponsored auto-IRA programs. The bill now heads to the governor's desk.