HB 78 heads to Senate Finance as Democrats push to revive pension-style retirement plan

By SUZANNE DOWNING

Feb. 8, 2026 – They’re starting to count the votes. A long-running Democratic effort to reopen the door to defined-benefit-style retirement plans for Alaska public employees is now headed to its final committee stop before a Senate floor vote.

House Bill 78, sponsored by Reps. Andy Josephson, Calvin Schrage, and Neal Foster, is scheduled for a hearing Monday, Feb. 9, in the Senate Finance Committee.

The measure would allow certain new public employees in the Public Employees’ Retirement System (PERS) and Teachers’ Retirement System (TRS) to choose between the current defined contribution system and a new “shared-risk” defined benefit option.

Sponsors argue the bill is needed to address workforce recruitment and retention challenges, particularly in education and public safety.

But it represents a costly step backward at a time when Alaska is already staring at an estimated $1.8 billion budget gap this year — and when the state is still paying off billions in unfunded liabilities from the old pension system.

Alaska closed its traditional defined benefit pension plans to new hires in 2006, shifting public employees into defined contribution-style retirement accounts.

That change came after years of escalating retirement costs and mounting long-term obligations that left the state responsible for market risk and investment shortfalls.

Even today, the state continues to carry billions in remaining pension debt from commitments made under the pre-2006 system.

HB 78 would reintroduce a pension-like model; sponsors insist the proposal is different this time. It’s “opt in.”

The sponsor statement describes the new plan as a “shared-risk defined benefit plan,” arguing it would be more sustainable than the old system that placed all risk on the employer.

They also call it a recruitment tool that is needed because Alaska must offer stronger retirement security to compete for state workers.

They point to population decline and outmigration, citing Department of Labor data showing that between 2013 and 2024, roughly 47,000 more residents left Alaska than arrived.

“A pension fosters loyalty by guaranteeing predictable, secure retirement income,” the sponsors say, adding it could reduce turnover and improve stability in essential services.

Fiscal conservatives counter that Alaska’s public-sector workforce is already among the best compensated in the state, with wages and benefits generally exceeding what most private-sector workers receive.

They warn that expanding retirement guarantees would add pressure to an already unstable fiscal picture — and could eventually require new broad-based taxes to sustain.

With Alaska facing a major budget shortfall, lawmakers in Senate Finance will tackle the question that has followed pension debates for two decades:

How can the state afford to make new long-term retirement promises when it is still paying off the last round? The bill narrowly passed the House, 21-19, making a veto override vote a tricky play for Democrats and big-government Republicans.