DDN – President Joe Biden recently signed into law the Social Security Fairness Act, one of the final pieces of legislation he will sign before leaving office.

The bill, championed by Alaska U.S. Senator Lisa Murkowski for over two decades, repeals federal provisions that reduced Social Security payments for workers who contributed to Social Security and received public sector retirement benefits. The change will positively impact around 15,000 Alaskans.

“I’ve been working on the Social Security Fairness Act for as long as I’ve been representing Alaska in the United States Senate,” said Murkowski in a statement. “Hardworking public servants should not be denied the benefits that they paid for because of their career choices. I’m relieved that this longstanding injustice has been remedied.”

A Longstanding Issue for Alaskans

The law that docked Social Security benefits was introduced in the 1970s and 1980s as a response to concerns over the health of the Social Security program. These provisions reduced Social Security benefits by up to 50% for workers who received state retirement or disability benefits and worked less than 30 years in Social Security-covered jobs.

This issue disproportionately affected Alaska due to the state’s decision to opt all public sector employees out of Social Security. Originally, this decision was made based on the belief that Alaska’s pension plans were more generous than Social Security benefits, but that has not been the case for nearly two decades.

Alaska’s Retirement System Challenges

In 2006, Alaska transitioned away from public pensions for new employees, replacing them with a 401(k)-style retirement plan. This new system has proved to be volatile and does not offer guaranteed payouts in retirement, unlike the previous public pension system. This shift has caused significant concerns for public sector workers, including teachers and police officers.

The state’s current retirement system has been linked to high turnover rates in public service jobs, with some agencies experiencing vacancy rates over 30%. Many employees have left for jobs in other states, where the pension system remains intact and they are not penalized by the Social Security provisions.

The Push for Pensions Continues

While the Social Security Fairness Act is a welcome change for the 15,000 Alaskans impacted, there is still growing support for a broader change in the state’s retirement system.

In 2024, the Alaska Senate passed a measure to reinstate pensions for public employees, but the bill stalled in the Republican-controlled House. However, with the recent shift in the House to a Democratic-majority Bipartisan Coalition, there is renewed energy around this issue.

Rep. Zack Fields, who is expected to chair the House Labor and Commerce Committee, has expressed optimism about passing a pension bill. He highlighted the high vacancy rates in the Anchorage Police Department and schools as evidence that the state’s retirement system is contributing to staffing shortages.

“Do you support the police or not? And if you support the police, you have to fix our worst-in-the-nation retirement system,” Fields said. “If you want teachers in the classrooms, we can’t have the worst-in-the-nation retirement system for teachers … It’s not optional if you want Alaska to be economically competitive.”

Reference: Biden signs Murkowski-backed boost to Social Security into law