JUNEAU, Alaska—A bill introduced in the Alaska Senate would allow new public employees to choose to participate in a defined benefit or defined contribution plan.

The bill calls for a new defined benefit plan tier following backlash from 2006 legislation that made Alaska the first state to switch to an all defined contribution plan structure for new employees.

Employees who would opt in to the new defined benefit plan would receive the same pension benefit as current pre-2006 participants but would have to pay more for retiree health care coverage, said Jesse Kiehl, legislative aide to state Sen. Dennis Egan, the bill's sponsor. Employees that are currently in the DC structure would have the option to join the new DB tier.

“I think it's going to do a lot to predict risk and provide security for longtime public servants,” Mr. Kiehl said of the bill.

The 2006 bill was passed largely as an attempt to curb the unfunded liabilities. However, the Alaska Retirement Management Board in Juneau, which oversees the combined $18.4 billion in assets for the state's retirement systems, has seen its unfunded liabilities rise to $11 billion from $5 billion in 2006. The defined contribution plan had about $3.2 billion in assets as of Sept. 30.

Mr. Kiehl said employees are not the only ones pushing for a DB plan; municipalities are concerned with the potential of training and employing police officers for five years, only to see them bolt with their DC assets to another state that can offer a pension.

“My senator is deeply concerned with the decreased economic activity in Alaska,” Mr. Kiehl said. “When the lower 48 starts hiring again, Alaska has to start competing again.”

An actuarial analysis on whether the bill would be “cost-neutral” is expected to be released any day, a key step for the legislation to proceed. Mr. Kiehl said the report worked on by state and outside actuaries was supposed to have been released last week.

Kevin Olsen is a reporter for Pensions & Investments, a sister publication of Business Insurance.