Retirement meeting outlines benefits for peace officers and firefighters in PERS

The Alaska State Legislature's Senate Finance Committee meeting on April 7, 2025, spotlighted critical discussions surrounding retirement benefits for public employees, particularly focusing on the differences between defined benefit and defined contribution plans.

Key highlights revealed that peace officers and firefighters retiring at age 50 could expect a starting annual benefit of $64,403 from the defined benefit plan. In contrast, those in the defined contribution plan would see significantly lower initial benefits, projected at $25,006.98 with a 5% annual return, and $33,531 with a 7% return. This stark contrast underscores the financial implications of choosing between the two retirement systems.

The meeting also emphasized the impact of post-retirement pension adjustments, which are tied to the Anchorage Consumer Price Index. For instance, a peace officer's benefit could rise to $69,387 after ten years of retirement, reflecting an 8% increase, and further to $81,520 after twenty years, showcasing a 27% increase from the initial benefit. This highlights the compounded growth potential of defined benefit plans, which are not available in defined contribution plans unless participants purchase additional annuities.

The committee presented a detailed analysis of projected account balances for defined contribution participants, estimating that a firefighter retiring at age 50 could accumulate between $503,000 and $656,000, depending on investment returns. However, the total employee contributions over a 25-year career were noted to be slightly higher for defined contribution participants, at approximately $169,000 compared to $159,000 for those in the defined benefit plan.

Overall, the discussions reinforced the advantages of defined benefit plans, particularly in terms of long-term financial security and growth, as compared to the more static nature of defined contribution plans. The committee's findings are expected to influence future policy discussions regarding retirement benefits for Alaska's public employees.