Historical Alaska pension information

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The historical Alaska pension information below applies to prior calendar years. The tabs below may contain information from several different fiscal years; for example, the tab labeled "As published 2015" contains information from fiscal years 2013 and 2012 (the most recent data available at the time of initial publication). For more current information regarding Alaska's pension system, click here.

As published 2016

Alaska information (2015)

Total contributions: $3,092,490,000

Employee contributions: $146,588,000

Government contributions: $2,945,902,000

Total payments: $1,181,547,000

Total cash and investment holdings: $14,368,987,000

Number of state and local pension systems: 6

Active membership: 25,001

Inactive membership: 11,268

Key terms

Actuarial value of assets (AVA) • Unfunded actuarial accrued liability (UAAL) • Annual required contribution (ARC) • Discount rate • Funded ratio • Rate of return • Active member • Inactive member • OPEB

Hover over the above terms for definitions.

Note: This page utilizes information from a variety of sources. The information presented on this page reflects the most recent data available as of August 2016.

Alaska public pensions are the state mechanism by which state and many local government employees in Alaska receive retirement benefits.

According to the United States Census Bureau, there were six public pension systems in Alaska as of 2015. Of these, four were state-level programs, while the remaining two were administered at the local level. As of fiscal year 2015, membership in Alaska's various pension systems totaled 36,269. Of these, 25,001 were active members.

HIGHLIGHTS

In fiscal year 2015, the most recent year for which information is available, total contributions of $3.1 billion were made to Alaska's state and local pension systems. Of this amount, $146.6 million came from employees.

In fiscal year 2015, Alaska's state and local pension systems made payments totaling $1.2 billion.

As of fiscal year 2015, Alaska's state and local pension systems held $14.4 billion in total cash and investment holdings.

According to a 2013 report by Morningstar, an independent financial research group, most states' pension plans continued to be funded below the 80 percent level considered necessary for a healthy fund. Decreased funding and increasing liabilities since the 2008 recession continued to put pressure on local and state budgets, in some cases leading to bankruptcy. Higher pension costs can have the following consequences:

• higher taxes
• less intergovernmental aid for services
• lower credit ratings
• higher interest rates on state borrowing

State pension systems can vary in their organization, management, and accounting principles, making them difficult to compare. The basic information on this page comes from the U.S. Census Bureau, as reported by the states and pension funds themselves for fiscal year 2015.

General information

See also: Pension data, U.S. Census

According to the U.S. Census Bureau, Alaska had four state pension plans as of 2015:

1. Alaska Teacher's Retirement Benefits/Pioneer Benefits
2. Alaska Public Employees Retirement System
3. Alaska National Guard and Naval Military Retirement System
4. Alaska Judicial Retirement System

In addition to the aforementioned state-level pension systems, there were two locally administered pension systems in Alaska.

The table below provides general pension system information for Alaska and surrounding states.

General pension system information, 2015
State	Systems		Total members	Active members		Inactive members
	State	Local		Members	Percent of total	Members	Percent of total
Alaska	4	2	36,269	25,001	68.93%	11,268	31.07%
California	10	78	2,479,008	1,787,313	72.10%	691,695	27.90%
Oregon	2	17	317,594	267,646	84.27%	49,948	15.73%
Washington	10	50	383,830	319,493	83.24%	64,336	16.76%
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2015"

Contributions

See also: Pension contribution and payment data, U.S. Census

Pension contributions are the funds paid into pension systems. These contributions come from the employer (in the case of public pensions, the government) and employees. Investment earnings are the main source of increases in the fund and are listed separately in the rightmost column in the below table.

In fiscal year 2015, the most recent year for which information is available, total contributions of $3.1 billion were made to Alaska's state and local pension systems. Of this amount, $146.6 million came from employees. The remainder came from state and local governments. The table below provides information about pension contributions in Alaska and surrounding states in fiscal year 2015.

Pension contributions, fiscal year 2015 (dollars in thousands)
State	Total contributions from employees and employers	Employee contributions		Government contributions		Earnings on investments
		Contributions	Percentage of total	Contributions	Percentage of total
Alaska	$3,092,490	$146,588	4.74%	$2,945,902	95.26%	$217,014
California	$34,129,294	$9,455,671	27.71%	$24,673,623	72.29%	$28,304,726
Oregon	$1,884,986	$579,606	30.75%	$1,305,380	69.25%	$3,205,148
Washington	$2,594,885	$778,267	29.99%	$1,816,618	70.01%	$3,834,671
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2015"

Payments

See also: Pension contribution and payment data, U.S. Census

Payments are the amounts paid to pension recipients by their pension plans. Pension payments include benefits and withdrawals. Benefits are the regular payments made by a pension plan to the plan's recipients. Pension beneficiaries may also withdraw funds before they are due to receive regular benefits.

In fiscal year 2015, Alaska's state and local pension systems made payments totaling $1.2 billion. The table below provides pension payment information for Alaska and surrounding states in fiscal year 2015. The columns labeled "Benefits," "Withdrawals," and "Other" are subsets of total payments. All dollar amounts displayed should be multiplied by 1,000 ($240,000 is equal to $240,000,000).

Pension payments, fiscal year 2015 (dollars in thousands)
State	Total payments	Benefits	Withdrawals	Other
Alaska	$1,181,547	$1,148,079	$12,450	$21,018
California	$48,501,489	$44,861,838	$467,760	$3,171,895
Oregon	$5,022,442	$4,409,891	$18,797	$593,752
Washington	$4,289,312	$3,878,741	$76,662	$333,909
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2015"

Other post-employment benefits

See also: Other post-employment benefits, data

In addition to standard pension payments, some plans may offer pensioners additional benefits. These benefits, sometimes referred to as "other post-employment benefits," or "OPEBs," consist of health insurance, life insurance or other benefits that the pensioner may have received while employed. The cost of these benefits can prove complicated for actuaries to calculate because of the changes in fields like medicine. This, coupled with the normal challenges in calculating and meeting pension requirements, can result in funding shortages for pension plans.

Unfunded liabilities totaled nearly $500 billion throughout the country for OPEBs. Alaska was reported to have about $4.5 billion in unfunded liabilities for OPEBs. This was equal to about 0.91 percent of the country's total unfunded liabilities for these other services.

The chart below displays the unfunded liabilities for Alaska and some Northwestern states. All dollar amounts displayed should be multiplied by 1,000,000. For instance, $300 translates to $300,000,000.

Unfunded actuarial accrued liabilities for other post-employment benefits, fiscal year 2013 (dollars in millions)
State	Unfunded liabilities	Percent of total
Alaska	$4,511	0.91%
California	$66,000	13.26%
Oregon	$236	0.05%
Washington	$3,707	0.74%
U.S. Total	$497,693	100%
Source: National Association of State Retirement Administrators, "Retiree Health Care Benefits for State and Local Employees in 2014," accessed April 30, 2015. Note: Although this article was dated for 2014, all figures were reported to have come from fiscal year 2013 reports.

Cash and investment holdings

See also: Pension data, U.S. Census

Investments are a crucial part of the pension process. The goal is that, by investing pension contributions, the pensioner will receive more money when he or she retires than he or she and the employer were able to contribute. These investments can come in the form of cash investments, short-term investments, securities, or other investments. Cash investments are usually low-risk, short-term investments that have a lower rate of return than other types of investments. Other short-term investments are riskier than cash investments, but have the potential for greater returns. Securities can refer to stocks, bonds, or other types of financial certificates that hold some sort of financial value. As the values of these securities change, they can be traded to make a profit. While there are other applications of securities investments, this represents one of the most common practices.

As of fiscal year 2015, Alaska's state and local pension systems held $14.4 billion in total cash and investment holdings. The table below summarizes pension system cash and investment holdings for Alaska and surrounding states. The columns labeled "Total cash and short-term investments," "Total securities," and "Total other investments" are subsets of the grand total. All dollar amounts displayed should be multiplied by 1,000 ($240,000 is equal to $240,000,000).

Total cash and investment holdings, fiscal year 2015 (dollars in thousands)
State	Grand total	Total cash and short-term investments	Total securities	Total other investments
Alaska	$14,368,987	$166,708	$8,216,583	$5,985,696
California	$770,146,756	$31,875,108	$656,894,714	$81,376,934
Oregon	$73,348,754	$3,218,618	$62,255,034	$7,875,102
Washington	$79,578,888	$231,978	$63,821,501	$15,525,408
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2015"

Pension fund management fees

See also: Public pension fund management fees

In July 2013, the Maryland Public Policy Institute (MPPI) and the Maryland Tax Education Foundation released a report detailing the fees paid for the management of state pension systems. According to MPPI, the 10 state pension funds that paid the most in management fees relative to net assets experienced lower returns over a five-year period than the 10 state pension funds that paid the least in management fees. For example, in fiscal year 2012, South Carolina's pension system paid approximately $296.1 million in total management fees (1.31 percent of total net assets at the beginning of the fiscal year) and its five-year rate of return was 1.46 percent. By contrast, Alabama's pension system paid roughly $13.3 million in management fees (0.05 percent of total net assets) and its five-year rate of return was 7.53 percent.

The table below presents the information collected by MPPI for Alaska and surrounding states. For each state's pension system, total net assets are listed (both for the beginning and end of the fiscal year in question), as well as the total amount paid in management fees. In addition, the rates of return for the pension systems are presented. Compared to other Northwestern states, Alaska had lower total net assets and management fees, and a lower 5-year rate of return for the pension fund.

Public pension fund management fees, 2011-2012
State	Fiscal year	Total net assets at the beginning of the year	Total net assets at the end of the year	Total management fees	Management fees as % of total net assets	Five-year rate of return
Alaska	2012	$16,489,643,000	$16,419,886,000	$62,184,233	0.38%	0.86%
California	2012	$397,107,606,000	$388,300,002,000	$960,532,000	0.24%	-0.10%
Oregon	2012	$55,794,848,695	$53,659,423,570	$335,163,728	0.60%	1.80%
Washington	2012	$68,311,800,000	$67,887,700,000	$297,354,000	0.44%	1.20%
1"Three states— Hawaii, Nevada and Rhode Island—were excluded because they hadn’t published CAFRs for fiscal years ending December 31, 2011 or later. West Virginia was excluded because its June 30, 2012 CAFR lacked sufficient disclosure." Source: Maryland Public Policy Institute, "Wall Street Fees, Investment Returns, Maryland 49 Other State Pension Funds," accessed April 23, 2015. Note: To access this data, navigate to the list of links below the article and click "Exhibit A."

As published 2015

Public pensions in Alaska

General information (2013)

Total contributions: $734,047,000

Employee contributions: $166,658,000

Government contributions: $567,389,000

Total payments: $1,046,583,000

Total cash and investment holdings: $10,406,246,000

Number of state and local pension systems: 6 (4 state systems, 2 local systems)

Active membership: 34,961

Inactive membership: 8,636

Pension health (2012)

Assets: $10,255,099,000

Actuarial accrued liability (AAL): $17,329,260,000

Unfunded actuarial accrued liability (UAAL): $7,074,161,000

Funded ratio: 59.2%

UAAL per capita: $10,235

Public pensions in the states

Alabama • Alaska • Arizona • Arkansas • California • Colorado • Connecticut • Delaware • Florida • Georgia • Hawaii • Idaho • Illinois • Indiana • Iowa • Kansas • Kentucky • Louisiana • Maine • Maryland • Massachusetts • Michigan • Minnesota • Mississippi • Missouri • Montana • Nebraska • Nevada • New Hampshire • New Jersey • New Mexico • New York • North Carolina • North Dakota • Ohio • Oklahoma • Oregon • Pennsylvania • Rhode Island • South Carolina • South Dakota • Tennessee • Texas • Utah • Vermont • Virginia • Washington • West Virginia • Wisconsin • Wyoming

Public pensions • State public pension plans • Alaska state budget and finances

Note: This page utilizes information from a variety of sources. As such, the currency of the information varies somewhat. The information presented on this page reflects the most recent data available as of March 2015.

Alaska public pensions are the state mechanism by which state and many local government employees in Alaska receive retirement benefits. According to the United States Census Bureau, there were six public pension systems in Alaska as of 2013. Of these, four are state-level programs, while the remaining two were administered at the local level. As of 2013, membership in Alaska's various pension systems totaled 43,597. Of these, 34,961 were active members.

HIGHLIGHTS

Between fiscal years 2008 and 2012, the funded ratio of Alaska's state-administered pension plans decreased from 74.1 percent to 59.2 percent.

The state paid 88 percent of its annual required contribution, and as of fiscal year 2012, the pension system's unfunded accrued liability totaled $7.1 billion.

This amounted to $10,235 in unfunded liabilities per capita.

Background

The basic information on this page comes from the U.S. Census Bureau, as reported by the states and pension funds themselves for fiscal year 2013. Also included are comparative data from three different reports, which looked at the states' Comprehensive Annual Financial Reports (CAFRs).

General information

See also: Pension data, U.S. Census

According to the U.S. Census, Alaska had four distinct state pension systems as of 2013:

1. Alaska Teacher's Retirement Benefits/Pioneer Benefits
2. Alaska Public Employees Retirement System
3. Alaska National Guard and Naval Military Retirement System
4. Alaska Judicial Retirement System

In addition to the aforementioned state-level pension systems, there were two locally administered pension systems in Alaska.

The table below provides general pension system information for Alaska and surrounding states.

General pension system information, 2013
State	Systems		Total members	Active members		Inactive members
	State	Local		Members	Percent of total	Members	Percent of total
Alaska	4	2	43,597	34,961	80.19%	8,636	19.81%
Oregon	1	5	211,959	166,790	78.69%	45,169	21.31%
Washington	6	20	290,822	230,934	79.41%	59,888	20.59%
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2013"

Contributions

See also: Pension contribution and payment data, U.S. Census

Pension contributions are the funds paid into pension systems. These contributions come from the employer (in the case of public pensions, the government) and employees. Investment earnings are the main source of increases in the fund and are listed separately in the rightmost column in the below table.

In fiscal year 2013, total contributions of $734 million were made to Alaska's state and local pension systems. Of this amount, $166.7 million came from employees. The remainder came from state and local governments. The table below provides information about pension contributions in Alaska and surrounding states in fiscal year 2013.

Pension contributions, fiscal year 2013 (dollars in thousands)
State	Total contributions from employees and employers	Employee contributions		Government contributions		Earnings on investments
		Contributions	Percentage of total	Contributions	Percentage of total
Alaska	$734,047	$166,658	22.7%	$567,389	77.3%	$1,222,555
Oregon	$1,008,259	$16,986	1.68%	$991,273	98.32%	$7,367,400
Washington	$1,939,027	$653,632	33.71%	$1,285,395	66.29%	$7,543,120
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2013"

Payments

See also: Pension contribution and payment data, U.S. Census

Payments are the amounts paid to pension recipients by their pension plans. Pension payments include benefits and withdrawals. Benefits are the regular payments made by a pension plan to the plan's recipients. Pension beneficiaries may also withdraw funds before they are due to receive regular benefits.

In fiscal year 2013, Alaska's state and local pension systems made payments totaling $1.05 billion. The table below provides pension payment information for Alaska and surrounding states in fiscal year 2013. The columns labeled "Benefits," "Withdrawals," and "Other" are subsets of total payments. All dollar amounts displayed should be multiplied by 1,000 ($240,000 is equal to $240,000,000).

Pension payments, fiscal year 2013 (dollars in thousands)
State	Total payments	Benefits	Withdrawals	Other
Alaska	$1,046,583	$1,008,126	$16,536	$21,921
Oregon	$4,127,385	$3,690,899	$20,200	$416,286
Washington	$3,804,556	$3,469,169	$73,276	$262,112
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2013"

Cash and investment holdings

See also: Pension data, U.S. Census

As of fiscal year 2013, Alaska's state and local pension systems held $10.4 billion in total cash and investment holdings. The table below summarizes pension system cash and investment holdings for Alaska and surrounding states. The columns labeled "Total cash and short-term investments," "Total securities," and "Total other investments" are subsets of the grand total. All dollar amounts displayed should be multiplied by 1,000 ($240,000 is equal to $240,000,000).

Total cash and investment holdings, fiscal year 2013 (dollars in thousands)
State	Grand total	Total cash and short-term investments	Total securities	Total other investments
Alaska	$10,406,246	$126,482	$6,035,771	$4,243,993
Oregon	$59,390,416	$3,451,953	$49,096,094	$6,842,369
Washington	$65,919,198	$1,577,678	$44,873,896	$19,467,624
Source: United States Census Bureau, "State- and Locally-Administered Defined Benefit Pension Systems - All Data by State and Level of Government: 2013"

Pension health

Pension health is a term used to describe the overall state of pension systems. It can be difficult to gauge pension health in each state, but many studies use calculations to determine the average liabilities, unfunded liabilities, funded ratio and other data. Most experts believe that pension systems need to be funded at least 80 percent to be considered healthy. This information is then used to provide a snapshot of the state's overall pension health. This section provides information from three studies regarding the health of pensions in Alaska and neighboring states. They found the following:

• According to the Pew Charitable Trusts, Alaska paid 88 percent of its required contribution and its funded ratio was only 55 percent in fiscal year 2012.
• According to Morningstar, the state had a per capita pension debt of $10,235 and a funded ratio of 59.2 percent in fiscal year 2012.
• According to State Budget Solutions, which assumed a lower rate of return, Alaska had a per capita pension debt of $40,639 and a funded ratio of 25 percent in fiscal year 2013.

Pew research

See also: Pew Charitable Trusts pensions study, 2014

According to a 2014 report by the Pew Charitable Trusts, “Many states are seeing their pension debt continue to increase, despite reform efforts, because of missed contributions and the continued impact of investment losses.” The funding gap between what state pension systems have promised in benefits (liabilities) and current funding (assets) increased by $158 billion from 2010 to 2012 (14 percent), leaving state-run retirement systems with $915 billion in unfunded liabilities. Only 15 states made at least 95 percent of the annual required contributions (ARCs) for their pensions between 2010 and 2012; the aggregate shortfall in funding for all state plans was $21 billion. Data on these state pensions come from the Comprehensive Annual Financial Reports (CAFRs) that each state’s pension plan prepared for fiscal year 2012; these reports include actuarial valuations based on “the expected rate of return on investments and estimates of employee life spans, retirement ages, salary growth, retention rates, and other demographic characteristics.”

All dollar amounts displayed should be multiplied by 1,000,000 (e.g., $240,000 is equal to $240,000,000,000).

Pension health metrics from the Pew Charitable Trusts report, 2010-2012 (dollars in millions)
State	2012			Funded ratio			Percent of ARC paid
	Liability	Unfunded	ARC	2010	2011	2012	2010	2011	2012
Alaska	$18,062	$8,190	$589	60%	59%	55%	83%	89%	88%
Oregon	$60,405	$5,621	$1,239	87%	82%	91%	100%	83%	72%
Washington	$66,553	$3,256	$1,630	95%	94%	95%	53%	65%	74%
Totals in the U.S.	$3,298,643	$914,653	$87,213	75%	74%	72%	78%	77%	77%
Source: The Pew Charitable Trusts, "The Fiscal Health of State Pension Plans: Funding Gap Continues to Grow"

Morningstar report

See also: Pension data, 2013 Morningstar report

In 2013, independent investment research firm Morningstar released "The State of State Pension Plans 2013," a report detailing various metrics of pension system health in all 50 states. Morningstar found a $1.2 trillion gap in 2012 for the largest 100 U.S. public pension plans (according to the actuarial firm Milliman). Based on two key drivers in Morningstar’s analysis—the funded ratio and the unfunded actuarial accrued liability (UAAL) per capita—the fiscal solvency and management of these plans varied greatly. Overall, the firm found that "more than half of all states fall below Morningstar’s fiscally sound threshold of a 70 percent funded ratio" and all state plans combined were "72.6 percent funded with a UAAL per capita of roughly $2,600.”

According to Morningstar's research, Alaska's state pension plans were funded at a rate of 59.2 percent in fiscal year 2012. The table below provides state pension system health metrics for Alaska and surrounding states in fiscal year 2012. Figures in the columns labeled "Assets," "AAL," and "UAAL" are rendered in thousands of dollars (for example, $2,400,000 translates to $2,400,000,000). Figures in the remaining columns have not been abbreviated. To view the full report, click here.

Pension health metrics from the Morningstar report, fiscal year 2012
State	Assets	Liabilities (AAL)	Unfunded liabilities (UAAL)	Funded ratio	Unfunded liabilities per capita
Alaska	$10,255,099	$17,329,260	$7,074,161	59.2%	$10,235
Oregon	$50,168,200	$61,198,400	$11,030,200	82%	$2,932
Washington	$55,095,600	$56,145,000	$1,049,400	98.1%	$160
Totals in the U.S.	$2,157,578,916	$2,979,267,860	$821,688,945	72.40%	N/A
Source: Morningstar, "The State of State Pension Plans 2013: A Deep Dive Into Shortfalls and Surpluses," accessed September 16, 2013

State Budget Solutions report

See also: Pension data, State Budget Solutions report

State Budget Solutions is "a nonpartisan, nonprofit, national public policy organization with the mission to change the way state and local governments do business." It should be noted that although the organization is technically nonpartisan, its ideology and mission have conservative leanings. In November 2014, the organization released a research report that used a fair market valuation based on a discount rate of 2.743 percent to determine the unfunded liabilities of public pension plans. The group concluded that "state public pension plans were underfunded by $4.7 trillion in 2014, up from $4.1 trillion in 2013. Overall, the combined plans' funded status ... dipped 3 percentage points to 36 percent. Split among all Americans, the unfunded liability [was] over $15,000 per person."

According to the State Budget Solutions report, Alaska's pension plans were funded at a rate of 25 percent. This was lower than the Morningstar report's data, and below the Pew Center's recommended level of 80 percent.

To read the full report, click here.

Pension health metrics from the State Budget Solutions report, fiscal year 2013 (dollars in thousands)
State	Assets	Market liability*	Funding ratio	Unfunded liability	Unfunded liability per capita	Unfunded liability as % of 2013 gross state product
Alaska	$9,830,274	$39,700,280	25%	$29,870,006	$40,639	50%
Oregon	$49,265,900	$123,486,801	40%	$74,220,901	$18,886	34%
Washington	$65,644,400	$154,233,284	43%	$88,588,884	$12,708	22%
Totals in the U.S.	$2,679,831,466	$7,416,319,293	36%	$4,736,487,827	$15,052	29%
Source: State Budget Solutions, "Promises Made', Promises Broken 2014: Unfunded Liabilities Hit $4.7 Trillion"

Other factors

Rate of return

According to a 2012 analysis by the Pew Center for the States, most state pension plans assumed an 8 percent rate of return on investments at that time. Proponents argued that an 8 percent rate of return would bear out over the long-term (15-30 years). Critics asserted that this assumption was unrealistic, citing changing market conditions and lower investment returns across the board in preceding years.

Assuming a lower rate of return to predict investment earnings increases current plan liabilities, thereby lowering the percent funded ratio and requiring increased employer contributions (ARCs). This is because future plan liabilities are discounted based on the rate of return, so smaller expected investment returns result in larger actuarially accrued liabilities. For example, on September 21, 2012, the Illinois Teachers Retirement System voted to lower its rate of return from 8.5 percent to 8.0 percent. This change increased the state's fiscal year 2014 ARC from $3.07 billion to $3.36 billion. Similarly, when California's CalPERS reduced its projected annual rate of return from 7.75 percent to 7.5 percent in March 2012, it cost the state an additional $303 million for fiscal year 2013.

Financial crisis

In the wake of the 2008 recession, proponents of a lower assumed rate of return argued that the standard 8 percent assumptions could cause pension fund managers to engage in more risky investments and imprudent stewardship of public funds. Jeffrey Friedman, a senior market strategist at MF Global, said, "To target 8 percent means some aggressive trading. Ten-year Treasury [bonds] are yielding around 2 percent, economists say we are headed for a double-dip, and house prices aren't getting back to 2007 levels for the next decade, maybe.".

Advocates of the 8 percent return rate argued that the dip following the 2008 financial crisis did not prove that there was a long-term downward trend in investment returns. According to Chris Hoene, executive director of the California Budget Project, "The problem with [the market rate] argument is there isn’t significant evidence other than the short term blip during the economic crisis that there’s been that shift. It’s a speculative argument coming out of a very deep recession."

The National Association of State Retirement Administrators researched the median annualized rate of return for public pensions for the 1-, 3-, 5-, 10-, 20- and 25-year periods ending in 2013 and found it was 7.9 percent over the 20-year period, and exceeded 8 percent for the 1-, 3- and 25-year periods. It is important to note that the NASRA data reported the median returns, which means that median annualized returns of investment portfolios for half of the examined public pension funds failed to meet an 8 percent assumed rate of return.

Studies and reports

Pension fund management fees

See also: Public pension fund management fees

In July 2013, the Maryland Public Policy Institute (MPPI) and the Maryland Tax Education Foundation released a report detailing the fees paid for the management of state pension systems. According to MPPI, the 10 state pension funds that paid the most in management fees relative to net assets experienced lower returns over a five-year period than the 10 state pension funds that paid the least in management fees. For example, in fiscal year 2012 South Carolina's pension system paid approximately $296.1 million in total management fees (1.31 percent of total net assets at the beginning of the fiscal year), and its five-year rate of return was 1.46 percent. By contrast, Alabama's pension system paid roughly $13.3 million in management fees (0.05 percent of total net assets), and its five-year rate of return was 7.53 percent.

The table below presents the information collected by MPPI for Alaska and surrounding states. For each state's pension system, total net assets are listed (both for the beginning and end of the fiscal year in question), as well as the total amount paid in management fees. In addition, the rates of return for the pension systems are presented.

Public pension fund management fees, 2011-2012
State	Fiscal year	Total net assets at the beginning of the year	Total net assets at the end of the year	Total management fees	Management fees as a percentage of total net assets	Five-year rate of return
Alaska	2012	$16,489,643,000	$16,419,886,000	$62,184,233	0.38%	0.86%
Oregon	2012	$55,794,848,695	$53,659,423,570	$335,163,728	0.60%	1.80%
Washington	2012	$68,311,800,000	$67,887,700,000	$297,354,000	0.44%	1.20%
1"Three states— Hawaii, Nevada and Rhode Island—were excluded because they hadn’t published CAFRs for fiscal years ending December 31, 2011 or later. West Virginia was excluded because its June 30, 2012 CAFR lacked sufficient disclosure." Source: Maryland Public Policy Institute, "Wall Street Fees, Investment Returns, Maryland 49 Other State Pension Funds," accessed July 1, 2013

Other post-employment benefits

See also: Other post-employment benefits, data

In addition to standard pension payments, some plans may offer pensioners additional benefits. These benefits, sometimes referred to as "other post-employment benefits," or "OPEBs," consist of health insurance, life insurance or other benefits that the pensioner may have received while employed. The cost of these benefits can prove complicated for actuaries to calculate because of the changes in fields like medicine. This, coupled with the normal challenges in calculating and meeting pension requirements, can result in funding shortages for pension plans.

Unfunded liabilities totaled nearly $500 billion throughout the country for OPEBs. Alaska was reported to have about $4.5 billion in unfunded liabilities for OPEBs. This was equal to about 0.91 percent of the country's total unfunded liabilities for these other services.

The chart below displays the unfunded liabilities for Alaska and its surrounding states. All dollar amounts displayed should be multiplied by 1,000,000. For instance, $300 translates to $300,000,000.

Unfunded actuarial accrued liabilities for other post-employment benefits, fiscal year 2013 (dollars in millions)
State	Unfunded liabilities	Percent of total
Alaska	$4,511	0.91%
Oregon	$236	0.05%
Washington	$3,707	0.74%
U.S. total	$497,693	100%
Source: National Association of State Retirement Administrators, "Retiree Health Care Benefits for State and Local Employees in 2014," accessed April 30, 2015. Note: Although this article was dated for 2014, all figures were reported to have come from fiscal year 2013 reports.

Public pensions in 2012

In fiscal year 2012, according to the systems' Actuarial Valuation Reports, Alaska had a total of 34,041 active members in its retirement plans. Membership figures divide plan participants into two broad categories: active and other. Active members are current employees contributing to the pension system. Other members include retirees, beneficiaries, and other inactive plan participants (usually terminated employees entitled to benefits but not yet receiving them).

The following information was collected from the state's 2012 Actuarial Valuation Reports, which measured fund status as of June 30, 2012. Valuation reports are annual reports produced by outside consultants, using unaudited data provided by the pension systems themselves, in order to determine what employers in the system should contribute in the coming year to maintain or improve the fiscal health of the pension funds.

Alaska's Actuarial Valuation Reports for 2012 were produced by Buck Consultants, a global human resources consulting firm. The "percentage funded" was calculated by taking the current value of the fund and dividing by the estimated amount of total liabilities. The assumed rates of return used to calculate current fund value varied by system (see "Rate of return" for more information). The Government Accountability Office (GAO) and Pew Research Centers cited a percent funded ratio of 80 percent as the minimum threshold for a healthy fund, though the American Academy of Actuaries suggested that all pension systems "have a strategy in place to attain or maintain a funded status of 100 percent or greater." The column labeled "SBS figure" refers to a market liability calculation of the fund by the nonprofit organization State Budget Solutions. This analysis used a rate of return of 3.225 percent, which was based upon the 15-year Treasury bond yield. The organization called this a "risk-free" rate of return that would make it easier for states to achieve their pension funding requirements in the future. Beginning in 2006, all private sector corporate pension plans incorporated market costs into their funding schemes.

Basic pension plan information -- Alaska
Plans	Current value	Percentage funded		Unfunded liabilities		Membership
		State figure	SBS figure	State figure	SBS figure
Judicial Retirement System	$112,870,360	61.9%	N/A	$69,397,164	N/A	69 active members
National Guard and Naval Militia Retirement System	$33,682,091	102.8%		N/A		4,397 active members
Public Employees’ Retirement System	$6,530,421,000	57.1%		$4,898,523,000		22,730 active members
Teachers' Retirement System	$3,194,994,000	49.9%		$3,204,783,000		6,845 active members
Elected Public Officers Retirement System	N/A	0.00%		$18,220,782		0 active members
TOTALS	$9,871,967,451	54.7%	30%	$8,190,923,946	$23,715,600,000	34,041 active members

In 2005, the state legislature passed a measure moving the state's pension systems from a defined benefit program to defined contribution, or 401(k)-style, benefit. Union leaders argued that this was a mistake that would have a negative impact on employee retention.

Annual Required Contribution

Annual Required Contributions (ARC) are calculated annually and are a sum of two different costs. The first component is the "normal cost," or what the employer owes to the system in order to support the liabilities gained in the previous year of service. The second component is an additional payment in order to make up for previous liabilities that have not yet been paid for. According to a report by the Pew Center on the States, between 1999 and 2008, Alaska paid 77 percent of its annual required contribution.

On June 25, 2012, the Government Accounting Standards Board (GASB) approved a plan to reform the accounting rules for state and local pension funds. These revised standards were set to take effect in fiscal years 2013 and 2014. As a result, ARCs were removed as a reporting requirement. Instead, plan administrators and accountants will use an actuarially determined contribution or a statutory contribution for reporting purposes.

ARC historical data
Fiscal year	Judicial Retirement System		National Guard and Naval Militia Retirement System		Public Employees’ Retirement System		Teachers' Retirement System		Elected Public Officers Retirement System
	Annual Required Contribution (ARC)	Percentage contributed	Annual Required Contribution (ARC)	Percentage contributed	Annual Required Contribution (ARC)	Percentage contributed	Annual Required Contribution (ARC)	Percentage contributed	Annual Required Contribution (ARC)	Percentage contributed
2012	$5,051,754	107.3%	$895,565	100.0%	$351,674,000	89.2%	$229,509,000	85.2%	$2,005,829	100%
2011	$3,895,881	98.5%	$965,329	100.0%	$220,419,000	92.7%	$167,978,000	84.6%	$1,993,326	100%
2010	$5,236,646	69.8%	$2,415,077	107.8%	$217,080,000	86.0%	$170,788,000	78.6%	$2,079,786	100%
2009	$4,937,406	100%	$2,473,282	100.0%	$166,016,000	116.1%	$94,388,000	139.3%	$1,832,107	100%
2008	$3,898,001	1,045.0%	$1,737,406	675.6%	$140,729,000	107.4%	$134,544,000	106.0%	$1,747,475	100%

Public pensions in 2011

On June 27, 2013, Moody's Investor Service released its report on adjusted pension liabilities in the states. The Moody's report ranked states "based on ratios measuring the size of their adjusted net pension liabilities (ANPL) relative to several measures of economic capacity." In its calculations of net pension liabilities, Moody's employed market-determined discount rates (5.47 percent for Alaska) instead of the state-reported assumed rates of return (8 percent for Alaska's largest pension plan).

The report's authors found that adjusted net pension liabilities varied dramatically from state to state, from 6.8 percent (Nebraska) to 241 percent (Illinois) of governmental revenues in fiscal year 2011.

The adjusted net pension liability for Alaska's two largest pension systems (PERS and TRS) in fiscal year 2011 was ranked the 21st highest in the nation. The following table presents key state-specific findings from the Moody's report, as well as the state's national rank with respect to each indicator.

Adjusted net pension liabilities (ANPL) relative to key economic indicators - Alaska
	Governmental revenue*	Personal income	State GDP	Per capita
State findings	55.2%	32.1%	20.6%	$14,652
National ranking	22nd	1st	1st	1st
*Moody's uses governmental revenues as reported in each state's consolidated annual financial reports; this includes not only state-generated revenue, but federal funds, as well.

Historical pension plan data

Historical pension plan data - all systems
Year	Value of assets	Accrued liability	Unfunded liability	Funded ratio
2006	$9,720,897,285	$13,106,921,121	$3,386,023,836	74.2%
2008	$11,032,051,482	$14,567,631,177	$3,535,519,695	75.7%
2010	$9,876,700,811	$16,592,761,848	$6,716,061,037	59.5%
Change from 2002-2010	$155,803,526	$3,485,840,727	$3,330,037,201	-14.7%

Historical pension plan data - Judicial Retirement System
Year	Value of assets	Accrued liability	Unfunded liability	Funded ratio
2006	$77,310,716	$111,819,972	$34,509,256	69.1%
2008	$122,822,726	$130,596,048	$7,713,322	94.1%
2010	$115,000,226	$164,523,775	$49,523,549	69.9%
Change from 2002-2010	$51,316,317	$92,680,160	$41,363,843	-18.7%

Historical pension plan data - National Guard and Naval Militia Retirement System
Year	Value of assets	Accrued liability	Unfunded liability	Funded ratio
2006	$15,587,569	$25,457,589	$9,870,020	61.2%
2008	$28,370,756	$28,904,645	$533,889	98.2%
2010	$32,000,585	$30,034,407	-$1,966,178	106.5%
Change from 2002-2010	$19,886,560	$9,489,193	-$8,431,189	47.5%

Historical pension plan data - Public Employees’ Retirement System
Year	Value of assets	Accrued liability	Unfunded liability	Funded ratio
2006	$6,331,065,000	$8,094,043,000	$1,762,978,000	78.2%
2008	$7,210,772,000	$9,154,282,000	$1,943,510,000	78.8%
2010	$6,469,832,000	$10,371,672,000	$3,901,840,000	62.4%
Change from 2006-2010	$138,767,000	$2,277,629,000	$2,138,862,000	-15.8%

Historical pension plan data - Teachers' Retirement System
Year	Value of assets	Accrued liability	Unfunded liability	Funded ratio
2006	$3,296,934,000	$4,859,336,000	$1,562,402,000	67.8%
2008	$3,670,086,000	$5,231,654,000	$1,561,568,000	70.2%
2010	$3,259,868,000	$6,006,981,000	$2,747,113,000	54.3%
Change from 2006-2010	$-37,066,000	$1,147,645,000	$1,184,711,000	-13.5%

Historical pension plan data - Elected Public Officers Retirement System
Year	Value of assets	Accrued liability	Unfunded liability	Funded ratio
2006	$0	$16,264,560	$16,264,560	0%
2008	$0	$22,194,484	$22,194,484	0%
2010	$0	$19,550,666	$19,550,666	0%
Change from 2002-2010	$0	$3,286,106	$3,286,106	0%

Reforms

Proposed reforms

2013

Three bills pertaining to pension policy were submitted for consideration during the 2013 session of the Alaska State Legislature, but each died in committee.

2012

Although two bills pertaining to pension policy were submitted for consideration during the 2012 session of the state legislature, each died in committee.

Malpractice lawsuit

In June 2010, the Alaska Attorney General settled a professional malpractice suit for $500 million. In 2007 the state sued Alaska Retirement Management Board and Mercer Inc. for at least $1.8 billion, alleging mistakes by the company had contributed to an $8.4 billion state pension deficit. Mercer had been actuary for the state's Public Employees' Retirement System and Teachers' Retirement System pension plans.

See also

• Public pensions in the United States
• Alaska state budget and finances
• Tax policy in Alaska
• Pension statistics
• Public pension health by state
• Public pensions

External links

• Pension Tsunami
• Pension Calculator from Public Sector Inc.
• Alaska Public Employees' Retirement System - Comprehensive Annual Financial Report (2012)
• Alaska Teachers' Retirement System - Comprehensive Annual Financial Report (2012)

Footnotes

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