Alaska Senate passes bill restoring defined benefit pensions for public workers

The Alaska Senate passed legislation Wednesday to restore a defined benefit pension plan for public employees, marking the first time in 20 years that such a measure cleared both chambers of the Legislature.

House Bill 78 passed the Senate on a 12-8 vote and received House concurrence the following day, sending it to Governor Mike Dunleavy for his signature or veto. The bill would allow state workers, teachers, and municipal employees to choose between a defined benefit pension and the existing defined contribution plan starting July 1, 2027.

"This was the 34th attempt over the last 20 years, and so we are pleased that it was successful, and it was designed to be a very modest and yet secure pension for retirement," said Senator Cathy Giessel, chair of the Senate Resources Committee.

Alaska closed its previous defined benefit pension plans in 2006, moving all new public employees into defined contribution retirement accounts similar to 401(k) plans. Supporters of the change said the state needed to restore pensions to recruit and retain workers in competition with other states and the private sector.

The Senate added floor amendments that moderated the original House version. One amendment gave non-state employers the option to participate in the new pension system rather than requiring it. Another pushed the effective date to July 2027 to give the Division of Retirement and Benefits time to write regulations.

"The effective date has moved out now to July 1st, 2027, and that was in deference to the Division of Retirement and Benefits, who said they would need some time to write the regulations," Giessel said.

The Senate set the employer contribution rate at 22.5 percent through a floor amendment. Non-state employers including municipalities and school districts can opt out of the new system if they choose.

Senator Jesse Kiehl said the bill represents a material improvement for public sector recruitment and service delivery across Alaska.

"This bill really moves the needle. There are no perfect solutions to any complicated problem, but this is a material difference," Kiehl said. "This will make it worlds better and it will genuinely help the public sector, both the state and the cities and the school districts deliver the services Alaskans need more efficiently, more effectively."

The bill gives current employees a 180-day window to opt into the defined benefit plan. New hires would choose between the pension and the defined contribution plan when they start work.

Senate President said restoring defined benefit pensions had been a top priority for the Senate majority caucus and the House majority for the past four years.