State Could Save Money with Pension Deposit, Analyst Says

The state could save $5.3 billion in payments to Alaska's troubled public employees' retirement system by putting $2 billion into a reserve fund, according to a legislative fiscal analyst.

David Teal says the $2 billion would raise the system's funding ratio, or ratio of assets to liabilities. It also would save about $2 billion in annual contributions in the next five years alone, as compared to what the state would pay without the deposit, while maintaining an employer contribution rate of no more than 22 percent.

Teal says the state would be able to recover its initial $2 billion, but not for decades.

The testimony came during the Senate Finance Committee, which is considering ways to address $11 billion in unfunded pension liabilities between the public employees' and teachers' retirement systems.