Almost 20 years after eliminating Alaska’s public employee pension program, the House of Representatives has voted to open a new pension system for municipal and state workers.
With proponents saying the state’s existing, 401(k)-like retirement system is ineffective and a deterrent for hiring and retention, the House voted 21-19 on May 12 to approve House Bill 78. If enacted, it would create a new pension plan and allow current employees to opt into the program.
The bill advanced to the Senate, which is expected to take up the measure when the Legislature reconvenes in January 2026.
If the bill makes it into law, it would cover state employees as well as all of the teachers employed by local school districts and thousands of municipal workers employed by cities and boroughs across Alaska.
The bill’s opponents cited potential costs and said they fear a repeat of the state’s prior pension system, which accrued a multibillion-dollar shortfall after a failed estimate by actuaries, higher health insurance costs and retirees living longer.
The vote is a significant accomplishment for pension supporters: This is the first time since the old program ended in 2006 that the House has voted to restart a public pension for all state and municipal workers.
The state Senate voted in 2012 and 2024 to revive a pension program for all employees, and the House voted in 2022 to create a pension just for public safety workers, but none of those bills became law.
This time may be different. Prominent members of the Senate are determined to advance a pension bill next year, which would put the issue in front of Gov. Mike Dunleavy, who has previously opposed the idea.
House Majority Leader Chuck Kopp, an Anchorage Republican, said the bill is a major priority, even if the governor vetoes it.
“The constituents who sent us here to Juneau need to see us trying, with all our might, to fix the threadbare fabric of our public services in a way that is fiscally sustainable,” he said by text message after the May 12 vote. “Alaska will soon have a responsible pension plan; I don’t know what day or year, but it will have one again and we will be a competitive employer again.”
HB 78 would create a new pension investment fund separate from the existing one. Current employees would be allowed to switch from their 401(k)-style retirement system to the new system.
Retirement would be possible at age 60, or with 30 years of service. Police officers and firefighters would be allowed to retire at age 55, with at least 20 years of work, or at age 50 if they’ve worked at least 25 years.
Employees would be asked to contribute 8% of their pay to the pension plan, but that would be adjustable, up to 12% of wages, if the additional money is needed to avoid a funding gap.
Health insurance benefits, a major contributor to the cost of the old pension system, are not included in the new program.
Proponents have billed the pension revival as a way to fight employee turnover and alleviate a chronic worker shortage at state agencies.
Since 2006, when the pension program ended for new employees, research has found that new state and municipal workers in Alaska are now much less likely to remain in the state and frequently earn less money toward retirement under the savings plans than employees who receive pensions.
Kopp, speaking on the House floor, said that because the retirement system has failed to meet employee demand, the state is now paying more than it should in pay and bonuses.
“The fundamental question to me is are we going to create an environment where people can stay in Alaska or move to Alaska … and stay for a lifetime,” said Anchorage Rep. Ky Holland.
Those who voted against the bill said they are concerned about the accuracy of cost projections and doubt that the bill will deliver on backers’ promises.
“You can say it’s a more modern version (of a pension). Perhaps it is, but it feels like it is still an unaffordable model,” said Rep. Cathy Tilton, a Wasilla Republican.
Rep. Andy Josephson, an Anchorage Democrat, said the bill offers a chance to stop the “everlasting hamster wheel” of employee training and will be a big morale booster for public employees.
“This is a vote of hope that we can do better,” he said.
The Alaska Beacon is an independent, donor-funded news organization. Alaskabeacon.com.
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