Legislature(2011 - 2012)CAPITOL 120

04/05/2012 01:00 PM MILITARY & VETERANS' AFFAIRS


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01:53:32 PM Start
01:53:49 PM SJR16
02:02:59 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 1:45 pm Today --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= SJR 16 MILITARY PENSIONS TELECONFERENCED
Moved Out of Committee
                    SJR 16-MILITARY PENSIONS                                                                                
                                                                                                                                
1:53:49 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER announced that the  only order of business would                                                               
be  SENATE JOINT  RESOLUTION  NO. 16,  Urging  the United  States                                                               
Congress to approve legislation  allowing members of the military                                                               
to receive promised retirement benefits.                                                                                        
                                                                                                                                
1:54:25 PM                                                                                                                    
                                                                                                                                
KENDRA KLOSTER,  Staff, Senator  Bill Wielechowski,  Alaska State                                                               
Legislature, presented SJR 16 on  behalf of Senator Wielechowski,                                                               
sponsor.  She  informed the committee that SJR 16  urges the U.S.                                                               
Department of  Defense (DoD) and  Congress to  reconsider changes                                                               
proposed by the  Defense Business Board, DoD,  which would affect                                                               
the military  pension system.  At  this time, the military  has a                                                               
20-year  vesting  system;  however, the  Defense  Business  Board                                                               
suggests  removing  this  provision, and  making  other  changes.                                                               
Senate  Joint Resolution  16 advocates  that service  members who                                                               
have  already enlisted  have  the option  to  keep their  20-year                                                               
pension  that was  promised at  induction.   Furthermore, SJR  16                                                               
supports the passage  of H.R. 3520, the Keeping  Our Promises Act                                                               
of 2011, introduced by Congressman Don Young.                                                                                   
                                                                                                                                
1:55:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN disclosed a conflict of interest.                                                                           
                                                                                                                                
CO-CHAIR SADDLER indicated Representative  Lynn would be required                                                               
to vote.                                                                                                                        
                                                                                                                                
CO-CHAIR THOMPSON acknowledged that  a retired service member may                                                               
draw retirement income  for over 40 years; however,  he opined it                                                               
is a  bad idea to  deny retirement after  20 years of  service to                                                               
someone who  has risked their life.   He asked what  studies show                                                               
on the differences in cost and  liability, or how the 40l(k) plan                                                               
fits in for those who transfer.                                                                                                 
                                                                                                                                
MS.  KLOSTER  referred to  materials  provided  in the  committee                                                               
packet  entitled, "Modernizing  the Military  Retirement System,"                                                               
dated 7/21/11,  and prepared by  the Defense Business  Board Task                                                               
Group.   She pointed out that  the ideas in the  overview are not                                                               
finite,  and include  the option  of  a 401(k)-style  plan.   The                                                               
resolution does  not oppose this  plan, but urges that  those who                                                               
signed up  under a  20-year plan should  still have  that option.                                                               
Ms. Kloster offered to provide further information on costs.                                                                    
                                                                                                                                
1:58:28 PM                                                                                                                    
                                                                                                                                
CO-CHAIR THOMPSON  surmised that under  a 401(k) plan,  a service                                                               
member could serve for five or  ten years, then leave the service                                                               
and roll  over the 401(k)  into an individual  retirement account                                                               
(IRA).   He opined this would  have a negative effect  on the DoD                                                               
because currently a service member must  stay for 20 years to get                                                               
retirement.                                                                                                                     
                                                                                                                                
MS.  KLOSTER called  attention to  page 9  of the  aforementioned                                                               
Defense  Business   Board  Task  Group  overview   and  read  the                                                               
following:                                                                                                                      
                                                                                                                                
     The retirement  plan is unaffordable.   For each dollar                                                                    
     of current  pay, the retirement plan  accrues 33 cents,                                                                    
     for a total  of $24 billion in FY 11.  ... Increases in                                                                    
     inflation  and life  expectancy  will further  increase                                                                    
     military retirement costs.                                                                                                 
                                                                                                                                
MS. KLOSTER  said the overview  discusses the costs for  a number                                                               
of different  plans, but this  information is  "very preliminary"                                                               
and she was unsure what type  of plan would be considered, or how                                                               
many service  members would be  "grandfathered" into a  plan. She                                                               
agreed that 401(k)  plans are "something that they  would be able                                                               
to take with them."                                                                                                             
                                                                                                                                
2:00:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN stated  that retirement age is  relative to a                                                               
person's experience.                                                                                                            
                                                                                                                                
CO-CHAIR  SADDLER appreciated  the value  of the  20-year pension                                                               
plan,  and agreed  that  promises to  service  members should  be                                                               
kept;  however,  he  suggested that  service  members  should  be                                                               
offered alternatives that may better  serve their interest.  Some                                                               
of the options  proposed by the Defense Business  Board are worth                                                               
consideration such  as credit for  service of less than  20 years                                                               
and  for  those  who  served  hazardous or  hardship  duty.    He                                                               
concluded that this is a  complicated issue with many options and                                                               
cautioned  that  the   resolution  may  be  seen   as  a  blanket                                                               
endorsement of the 20-year program.                                                                                             
                                                                                                                                
2:02:39 PM                                                                                                                    
                                                                                                                                
CO-CHAIR THOMPSON  moved to report  SJR 16 out of  committee with                                                               
individual  recommendations  and the  zero  fiscal  note.   There                                                               
being no  objection, SJR 16  was reported from the  House Special                                                               
Committee on Military and Veterans' Affairs.                                                                                    

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