Keith Brainard discusses retirement plan options for Alaska public employees

Alaska's Senate Labor and Commerce Committee convened on March 31, 2025, to discuss critical issues surrounding the state's retirement plans, particularly focusing on the implications of inflation on benefits for retirees and current employees. A significant concern raised during the meeting was the potential impact of high inflation on the sustainability of retirement funds, especially for those who are no longer contributing to the system.

Senator Yount highlighted the lack of provisions for retirees if inflation exceeds normal levels, questioning whether the financial burden would shift to current employees. The committee learned that while retirees would not be required to contribute more, the fund's earnings would need to cover any substantial inflation adjustments, raising concerns about the long-term viability of the retirement system.

Keith Brainard, Research Director of the National Association of State Retirement Administrators, provided testimony emphasizing that well-designed retirement plans can meet the needs of all stakeholders, including public employees, employers, and taxpayers. He argued against the notion that defined benefit plans are inherently flawed, citing successful examples from other states like South Dakota and Wisconsin, which maintain stable costs and low unfunded liabilities.

Brainard pointed out that the design of retirement plans, rather than their classification as defined benefit or defined contribution, is crucial for ensuring sustainability. He advocated for features such as cost-sharing between employees and employers, pooled asset management, and lifetime benefit payouts to enhance retirement security and reduce costs.

The committee's discussions underscored the importance of evaluating Alaska's retirement plan design in comparison to successful models from other states. As the meeting concluded, Brainard committed to providing further analysis on how Senate Bill 88 aligns with these successful retirement strategies, indicating a proactive approach to addressing the challenges facing Alaska's retirement system.

This meeting marks a pivotal step in reassessing Alaska's retirement framework, with potential implications for the financial security of both current employees and retirees in the face of economic uncertainties.