HB 302 proposes enhancements to defined contribution retirement plans for teachers, police officers, and firefighters, offering a more affordable alternative compared to traditional defined benefit plans. These enhancements align with national workforce trends, acknowledging the changing nature of employment, particularly among younger generations like millennials and Gen Z, who tend to switch jobs more frequently.
The bill increases employer contributions to retirement plans for teachers, police officers, and firefighters, aiming to bring these plans in line with national standards. While studies suggest that retirement benefits are not the primary factor influencing recruitment and retention of teachers, offering improved retirement options can enhance career flexibility and attractiveness, especially for those in demanding professions like law enforcement and firefighting.
National trends indicate lower retention rates among public employees hired in recent years, particularly among millennials and Gen Z. This demographic shift underscores the diminishing relevance of traditional defined benefit plans in promoting retention within the public sector. Enhanced defined contribution plans offer greater appeal to a workforce that values flexibility and mobility in their careers.
Alaska’s Defined Contribution Retirement Plan, established within the Public Employees’ Retirement System and the Teachers Retirement System, caters to employees hired after 2006. Unlike Social Security, which many members do not participate in, the plan offers a supplementary benefit known as the Alaska Supplemental Benefits Plan (SBS). SBS provides a 6.13% contribution from both employers and employees, offering investment opportunities and serving as a more attractive option than federal Social Security.
However, teachers enrolled in the Teachers Retirement System do not currently have access to SBS, creating disparities in retirement benefits across different categories of public employees. HB 302 addresses this imbalance by allowing TRS participants to opt into the SBS plan, ensuring more equitable retirement benefits. HB 302 also allows any police officers or firefighters who are PERS participants to join SBS.
Furthermore, public safety employees, who often retire at earlier ages due to job demands, face funding challenges for earlier retirement. With a suggested minimum contribution rate of 30% for such employees, the current combined contribution rate falls short. HB 302 seeks to bridge this gap by increasing state contributions to achieve the recommended 30% combined contribution rate for public safety workers.
In summary, HB 302 aims to modernize retirement benefits for teachers and public safety employees in Alaska, aligning them with national workforce trends and ensuring equitable access to enhanced defined contribution plans. By addressing disparities in retirement benefits and adapting to the evolving needs of the workforce, the bill strives to support the financial security and well-being of Alaska’s public servants.
More Information: AK LEG