By ALEX GIMARC
June 3, 2026 – This one may get me ostracized by my side (the political right) for asking the question, but it might at least be worth considering.
The question for the readership is this: Should the response to the union / RINO / Democrat push for defined benefit pensions (a return to PERS Tier 1) be Yes rather than No?
Before you request drug tests, here is where the question comes from:
- First – as this is persuasion play, the most important, powerful response to any question is “Yes!” The problem is how can we possibly say yes in a world where Alaska’s public employee pensions are a good $7 billion in the hole (PERS / TERS 1-3?
- The reason a yes response might work is today employees want portable pensions and medical care. The more portable, the better.
Is it possible to both support defined benefits and meet the desire for full portability?
Maybe the solution is to give new hires the choice between defined benefit and complete portability at the point of hire and expect nobody will sign up for defined benefit pensions given the time of employment (a decade) to fully vest in defined benefit pension (aka golden handcuffs)
We know that the backers view a return to Tier 1 as a simple payoff to their union masters and campaign funders. We also know that opening this to first responders is simply a camel nose under the tent preparatory to expanding this quickly to all state employees in the near future when they have the votes to do so. Funding, as always will come from the corpus of the Permanent Fund, as they already have the PFD spent.
Their problem is that over the last 30 years, the economic world has changed. A LOT. And defined benefits are no longer viewed as a positive lifestyle choice by employees, particularly new hires. They are today viewed as golden handcuffs, locking in the participants to a decade to more of indentured servitude in support of the leadership’s political promises. Yeah, they pay well a decade or more down the road, but what are they doing for me today? Zip. Zero. Nada.
The other thing working against it is the absolute unpredictability of legislation these days. We have seen in multiple states — Colorado, Minnesota, and Virginia — when Democrats score the trifecta of total control of both houses of the legislature and governorship, every single wet dream of Democrats will be passed in an orgy of lunatic legislation during the first month or so after being sworn in. And if democrats can go after gun owners, ICE or women’s sports with impunity, they can most certainly go after employee pensions. Much better in this world to have the money in your own bank accounts than to trust that your state will remain rational for the decade it will take you to vest in the defined benefit system.
I think a dual solution is possible. On one side, an employee gets a 401K / 457 pension, with the ability to invest additional funds. Along with it, a fully portable Medical Savings Account with which they can purchase consigliere medical and catastrophic care insurance. On the other hand, the democrat / RINO coalition can offer the old fashioned, non-portable golden handcuffs after a to be determined vesting period. Force a choice upon hire and let the system operate.
While I think such a system would work nicely, especially in today’s employment environment, given the complete lack of trust in the current democrat / RINO / union coalition, I don’t think it is currently possible to trust such legislation would even make it through the legislature, much less not be retroactively changed by a future democrat legislative majority with a democrat governor. They might even figure out how to get the courts to do their dirty work for them.
Any party capable of dreaming up multiple Republican Dan Sullivans to confuse voters is not to be trusted for anything in the future. The only saving grace is that they are at least predictable.
That’s a pity, because properly written defined benefit legislation has the potential to stop the economic suicide attempted by the legislature this session.
More importantly, it would put the issue to bed for decades by giving them what their leadership claims to want (defined benefits), which will be rejected by state employees who actually want complete portability.
While this is probably too dangerous to consider today, it might be an approach to at least discuss sometime in the future.
Alex Gimarc lives in Anchorage since retiring from the military in 1997. His interests include science and technology, environment, energy, economics, military affairs, fishing and disabilities policies. His weekly column “Interesting Items” is a summary of news stories with substantive Alaska-themed topics. He was a small business owner and Information Technology professional.
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One thought on “Alex Gimarc: A thought experiment on defined benefits”
A 401K with matching funds invested in most any mutual fund will out perform any pension over 3+ years. Yes, technically the risk is with the employee, but the reward is so much better. The only problem is if employees don’t invest. Are state employees too dumb to invest themselves that they have to have a defined pension? That must be what the left wing thought is.