What is the Alaska Permanent Fund
The Alaska Permanent Fund is a fund which originates from surplus revenues gained from the development of Alaska's oil and gas reserves. Managed by The Alaska Permanent Fund Corporation, a state-owned corporation, the fund’s value was $64 billion as of March 27, 2018.
The Alaska Permanent Fund is a fund that pays an annual dividend to all Alaska residents who meet eligibility requirements.
BREAKING DOWN Alaska Permanent Fund
The Alaska Permanent Fund is a sovereign wealth fund (SWF), which invests in a wide array of asset classes, including domestic stocks, U.S. bonds, global stocks, real estate and private equity. Management of the fund is by the Alaska Permanent Fund Corporation. After completion of the Trans-Alaska Pipeline System, which introduced Alaskan oil to the market in 1976, Alaska’s government added a state constitutional amendment setting aside a share of oil revenues for future generations of Alaskans. The revenues from these natural reserves form the basis of the Alaska Permanent Fund.
The Alaska Permanent Fund and Dividends
The Alaska Permanent Fund pays out yearly dividends, called the Permanent Fund Dividend (PFD). To qualify for a dividend, the Alaska residents must have lived a full calendar year in the state and must intend to remain in Alaska. However, several factors may exclude an individual from eligibility. If during the qualifying calendar year, an individual is sentenced as a result of conviction of a state felony, incarcerated as a result of a state felony, or convicted of specific misdemeanors, they may no longer be eligible to collect the PFD.
Based upon a five-year average of the Alaska Permanent Fund's performance, the dividend varies widely depending on the stock market among other factors. Using the original formula 2018’s dividend would be $2700, but was reduced to $1600 through legislative action. The most significant payout was in 2015 at $2072. In 2008, the second largest payment of $2,069 came with an additional $1,200 through Senate bill number 4002, signed by then-governor Sarah Palin.
Other Sovereign Wealth Funds
There are nine states besides Alaska which operate sovereign wealth funds. The funds help to finance specific services or to provide general revenue to the state government itself. Alabama, Alaska, Louisiana, Montana, New Mexico, North Dakota, Oregon, Texas, Utah and Wyoming all operate sovereign wealth funds.
A sovereign wealth fund consists of pools of money derived from a country or state’s reserves, set aside for investment purposes to benefit the country or state’s economy and citizens. The funding for a sovereign wealth fund comes from central bank reserves which accumulate as a result of budget and trade surpluses. Funds also generate from the exports of natural resources.
The most massive sovereign wealth funds are Norway’s Government Pension Fund, the United Arab Emirates’ Abu Dhabi Investment Authority, and China’s China Investment Corporation.