02/21/2018 03:15 PM House LABOR & COMMERCE

                 HB 306-PERS/TERS DISTRIBUTIONS                                                                             
                                                                                                                              
4:40:44 PM                                                                                                                    
                                                                                                                                
CHAIR KITO  announced that the  final order of business  would be                                                               
HOUSE  BILL NO.  306, "An  Act relating  to disbursement  options                                                               
under the Public  Employees' Retirement System of  Alaska and the                                                               
Teachers'  Retirement System  of Alaska  for participants  in the                                                               
defined contribution plan; and providing for an effective date."                                                                
                                                                                                                                
4:40:58 PM                                                                                                                    
                                                                                                                                
SYLVAN  ROBB, Deputy  Commissioner, Department  of Administration                                                               
(DOA), testified in the hearing on  HB 306.  She reminded that HB
  moves to  take the  disbursement options  for retirees  from                                                               
statute to regulations,  so the department can be  more nimble as                                                               
more options  for disbursements  come out.   She added  that this                                                               
process will allow for public comment in the process.                                                                           
                                                                                                                                
4:41:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BIRCH asked  about the net effect  of the proposed                                                               
bill.                                                                                                                           
                                                                                                                                
MS.  ROBB answered  that HB  306  would allow  the department  to                                                               
respond  more  quickly to  retirees  and  to change  things  more                                                               
quickly.                                                                                                                        
                                                                                                                                
REPRESENTATIVE BIRCH asked for a concrete example.                                                                              
                                                                                                                                
4:43:15 PM                                                                                                                    
                                                                                                                                
KATHY LEA, Deputy Director, Division  of Retirement and Benefits,                                                               
Department  of Administration  (DOA), answered  questions in  the                                                               
hearing on  HB 306.   She  answered that one  of the  options the                                                               
Alaska  Retirement Management  Board (ARMB)  is looking  at is  a                                                               
guaranteed  lifetime  withdrawal  option.     She  explained  the                                                               
employee can go into the plan  about ten years before they retire                                                               
and can  pay an insurance  premium to  ensure their balance.   In                                                               
this way, the highest balance that  they receive will be what the                                                               
monthly benefit  payment will be based  on.  She added  that this                                                               
allows retirees  to enjoy the  upside of the market  but protects                                                               
them  from the  downside.   She  explained that  this  is a  very                                                               
important   consideration   when   preparing   participants   for                                                               
retirement readiness.   She  added the  option was  not currently                                                               
included in the  options in stature so could not  be added to the                                                               
PERS/TERS  defined   contribution  plans.    She   described  the                                                               
qualified lifetime annuity contract.   She said it had a specific                                                               
definition  with the  Internal Revenue  Service (IRS)  and defers                                                               
the annuity until age 80.                                                                                                       
                                                                                                                                
4:45:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KNOPP  asked   who  else   in  the   private  or                                                               
governmental sector was offering similar benefits.                                                                              
                                                                                                                                
MS. LEA replied that she could  not list the states but that many                                                               
states were doing  the same.  She added many  corporations in the                                                               
private  sector are  also offering  similar  retirement plans  to                                                               
their employees.                                                                                                                
                                                                                                                                
4:46:28 PM                                                                                                                    
                                                                                                                                
CHAIR KITO said  public testimony was still open  from a previous                                                               
hearing.  Upon ascertaining the  no one was available to testify,                                                               
he closed public testimony on HB 306.                                                                                           
                                                                                                                                
4:46:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WOOL moved to report  HB 306 out of committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There being no objection, it was so ordered.