Alaska PERS Retirement Calculator

The tier structure: why your hire date determines your retirement plan

Alaska PERS has four tiers. Tiers I, II, and III have defined benefit pensions. Tier IV does not.

Tier I covers members hired before July 1, 1986. These are the most flexible retirement terms: unreduced at 60 with any amount of service, or unreduced at 55 with 30 years. No minimum service requirement for the age-60 path. A Tier I member with just 8 years who is 60 gets a full unreduced benefit on those 8 years.

Tiers II and III tightened the requirements. Unreduced retirement requires age 60 with at least 10 years of service, or age 55 with 30 years. The difference from Tier I is that the age-60 path now requires 10 years. Both Tier II and III apply a 5% per year early reduction for members who retire at 55 to 59 with 20 to 29 years of service.

Tier III hired between July 1, 1996 and June 30, 2006 uses the same retirement eligibility rules as Tier II. The main differences between II and III involve contribution rates and some plan design details, not the benefit formula or eligibility ages.

Tier IV started July 1, 2006 and has no DB plan at all. If you were hired on or after that date, you're in the Defined Contribution Retirement plan. There's no monthly formula. Your retirement income depends entirely on your account balance.

The 2% formula in practice

All three DB tiers use the same formula: 2% times years of service times your 3-year final average salary. An Alaska state employee with 28 years of service and a $75,000 FAS receives 0.02 x 28 x $75,000 = $42,000 per year, or $3,500 per month. That's 56% of their final average salary.

The 3-year FAS window is relatively tight. States that use 5-year windows tend to produce lower FAS figures for most employees because the average spans more of the career. Alaska's 3-year window, using consecutive years, typically captures the highest-earning period of a career. For most members, that's the final three years before retirement.

Vesting is 5 years across all three DB tiers. Leave before 5 years and you can withdraw your contributions, but you forfeit the pension. Stay past 5 years and you're entitled to a deferred benefit at retirement age even if you leave state employment.

The Alaska COLA supplement

Alaska's cost-of-living allowance is one of the more unusual features in any state pension system. Starting at age 65, PERS members receive an additional monthly payment equal to 10% of their base pension benefit, capped at $250 per month.

A retired member with a $2,500 monthly pension hits 10% at $250, so they receive exactly $250 more per month. A member with a $1,800 monthly pension gets $180 more. A member with a $4,000 monthly pension would hit 10% at $400, but the cap kicks in and they receive $250. The cap affects anyone with a monthly benefit above $2,500.

This supplement was created to help retirees with Alaska's high cost of living. Groceries, utilities, and housing in Anchorage or Fairbanks run substantially higher than the national average. The $250 cap, set years ago, doesn't fully address that gap anymore, but it's still meaningful income. Over a 20-year retirement, $250/month is $60,000 in total additional payments.

The supplement is a fixed amount and doesn't grow with inflation. It's not a percentage that compounds year over year. It's $250 in 2026, and it'll still be $250 in 2046 unless the legislature changes the cap.

Why Alaska closed the DB plan in 2006

Alaska's pension crisis wasn't subtle. By the mid-2000s, PERS and the Teachers' Retirement System had a combined unfunded liability of roughly $8 billion. The state was contributing heavily and still falling behind. Investment returns couldn't close the gap fast enough, and the liability kept growing with each new member added to the DB system.

In 2006 the legislature closed both plans to new members and created the Defined Contribution Retirement plan for all new hires. This stopped the bleeding on the unfunded liability, since no new members were accruing DB obligations, but it did nothing to address the existing debt.

Alaska has been paying down that liability ever since. The state made large lump-sum contributions to the pension trust fund in 2014 and subsequent years. Funding ratios improved. But Tier I, II, and III members are still owed their DB pensions, and the state remains legally obligated to pay them.

Tier IV employees got a DC plan that looks more like a 403(b). The employer contributes a percentage of salary, the employee contributes, and the balance is theirs. Investment risk transferred to the employee completely. Whether that's a better or worse deal than the old DB plan depends heavily on investment returns and career length.

Social Security and Alaska PERS

Unlike Ohio and Indiana teachers, most Alaska PERS members do participate in Social Security. They pay both PERS contributions and Social Security taxes, and they build benefits in both systems. At retirement, they have two income streams: the PERS pension and Social Security.

The Social Security Fairness Act, signed in January 2025, repealed the Windfall Elimination Provision and the Government Pension Offset. Before the repeal, Alaska PERS members who also had Social Security earnings sometimes had those benefits reduced because of WEP. With repeal, those reductions no longer apply. If WEP previously cut your Social Security benefit, contact SSA to confirm your updated amount.

How Alaska PERS compares to FERS and military retirement

Federal employees under FERS use a 1% multiplier (or 1.1% with 20+ years and age 62), compared to Alaska PERS's 2%. Alaska's formula is more generous per year of service. A federal employee with 25 years gets 25% to 27.5% of their high-3 salary. An Alaska PERS member with 25 years gets 50%.

Military retirement under the legacy Final Pay and High-36 systems uses 2.5% per year, slightly better than Alaska PERS. The Blended Retirement System for military members joining after January 2018 uses a lower multiplier combined with a TSP match, similar to how Alaska moved toward DC for Tier IV.

Alaska PERS members considering federal service should know that PERS and FERS don't have a reciprocity agreement. Years of service in one don't count toward the other. You'd start fresh on vesting and benefit accrual in whichever system you moved to.