Now's the time to act — tell your
legislators to return Alaska to a secure
pension system with health care for
public employees.
Whether you
just started your career this fall, or
you’re a 25-year veteran, this warning
applies to you. EVERYONE in the education
family stands to lose under the state’s new
retirement plan for public employees. Here
are a few of the most frequently asked
questions about the admittedly complex
retirement issue – and what you can do to
make sure your retirement benefits are there
when you need them.
Q. “Defined
benefit” or “defined contribution” – What’s
the difference?
A.
Under a defined benefit pension system, you
and your school district pay into the system
over the years, and when you retire you’ll
have a stable and predictable monthly
pension and health care benefits for the
rest of your life. Teachers and education
support professionals (ESPs) who were hired
prior to July 1, 2006 were enrolled under
this former retirement system. Alaska’s
retirement system was widely recognized as
one of the best in the country.
Starting
July 1, 2006, new teachers and ESPs have
been enrolled in the defined contribution
plan. This is like a 401(k) plan, and when
you retire, whatever you’ve accumulated in
your account will be what you have to live
on for the rest of your life. The experts
predict that under the present contribution
rates, and at anticipated salaries, you’ll
long outlive your retirement saving.
Q.
What about health insurance under the
new defined contribution plan?
A.
You must retire directly from the system to
gain access to health benefits. This means
if you start a career at 23, you would need
to be on the job until you’re 61 (within
five year of Medicare eligible age) – 38
years. The new system, a Health
Reimbursement Account, would likely bankrupt
you with medical costs just as you’re
needing good coverage more than ever.
Q. But won’t
I have a Social Security check every month?
A.
No teachers in Alaska earn Social Security
benefits through their job. If you qualify
for Social Security through a second job or
a summer job, you won’t receive most of
those Social Security benefits because of
the Government Pension Offset and Windfall
Elimination Provision (GPO/WEP) federal law.
Many ESPs are in the same boat.
Q. I’m a
long-time teacher, and I’m in TRS (Teacher
Retirement System) Tier 1. Why should I be
concerned?
A.
Because when the state dismantled the
defined benefit pension system and moved new
hires into the 401(k)-type defined
contribution plan, that closed the former
system to new contributions by younger
teachers and ESPs. As more of our veteran
members retire, the draw-downs won’t be
replenished by new money coming in. That
puts a huge question mark around how secure
your hard-earned retirement benefits
actually are. [This answer also applied
to TRS Tier 2 and PERS (Public Employee
Retirement System) Tiers 1, 2, 3.]
Q. What
impact does the loss of a secure retirement
pension have on our schools?
A.
It’s already damaging Alaska’s ability to
attract – and keep – quality teachers and
support staff. And we all know that the #1
factor in student achievement is a quality
teacher in every classroom, aided by quality
education support professionals.
Q. What can
I do to help turn this around?
A.
Contact your legislators and other elected
officials – tell them how the defined
contribution system hurts schools and
children. Urge them to restore Alaska’s
defined benefit pension and health care.
Talk with your colleagues in school and the
public to help raise awareness about this
critical issue for our schools and children
and our own future. |
