Pension Sustainability: Alaska

Analysis of Alaska's policies

As of June 30, 2009, the most recent date for which an actuarial valuation is available, Alaska's defined contribution pension plan is fully funded for its members' accounts. The state's current defined contribution system is financially sustainable according to actuarial benchmarks.

Alaska does not commit excessive resources toward its defined contribution teachers' retirement plan. The mandatory employee contribution rate to the defined contribution plan is 8 percent, and the current employer contribution rate is 12.56 percent (7.96 percent funds the defined contribution plan and the excess helps pay the unfunded liabilities of the now-closed defined benefit plan). Both of these rates are reasonable, considering that teachers and local districts are not also contributing to Social Security. School districts in Alaska also must continue to contribute toward the state's closed defined benefit system. The total employer contribution is 38.56 percent, with 12.56 percent from districts and 26 percent from the state. The rate is determined according to statutory requirements, which establishes a set rate that districts must pay. The state is required to fund the remaining cost needed to meet the actuarially required contribution. 

The state is commended for switching to a financially sustainable system, but the debts of the closed system still add a burden to districts and the state. 

Citation

Alaska Department of Administration, Retirement and Benefits, Employer Contribution Rates http://doa.alaska.gov/drb/employer/employer_contribution_rates/db-dcr-plan-fy11-employer-rates.html Teachers' Retirement System, Comprehensive Annual Financial Report, For the Fiscal Year Ended June 30, 2010 http://doa.alaska.gov/drb/pdf/trs/cafr/2010_TRS_CAFR.pdf

Recommendations for Alaska

State response to our analysis

Alaska recognized the factual accuracy of this analysis.