The Alaska Permanent Fund Dividend (PFD) is a one-of-a-kind financial payment made by the State of Alaska to its residents. The fund was established during the late 1970s after the discovery of oil reserves at Prudhoe Bay, as a mechanism to ensure the wealth from the state’s natural resources benefits present and future generations. Each year, eligible Alaskans receive their share of the fund's investment earnings in the form of a cash dividend. However, the fund itself, the Alaska Permanent Fund Corporation (APFC), is now a multi-billion-dollar sovereign wealth investment portfolio. As of December 2024, the fund has a net worth of almost $83 billion and is one of the largest and most successful instances of a state investment fund designed for long-term sustainability and the benefit of its citizens.
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What Is the Alaska Permanent Fund?
The Alaska Permanent Fund is a state-owned investment fund established in 1976 by an amendment to the Alaska State Constitution. Its main purpose is to hold some of the state’s oil and gas revenues for future generations. The Alaska Permanent Fund Corporation manages the fund, investing in a diversified portfolio including stocks, bonds, real estate, and private equity.
Each year, part of the fund’s earnings are distributed as Permanent Fund Dividends (PFDs) to qualifying residents. The fund is a sovereign wealth fund (SWF) and adheres to best practices according to the Santiago Principles.
How Was the Alaska Permanent Fund Created?
The fund was first conceived after a $900 million bonus was provided to Alaska in 1969 from leases of oil fields. There was a sense among many citizens that the state legislature mismanaged the bonus funds, and people wanted a more sustainable way to manage them. When oil started flowing through the Trans-Alaska Pipeline System in 1976, voters approved an amendment to the constitution that required at least 25 percent of all mineral-related revenues, royalties, lease rentals, and the like, to be reserved in the Permanent Fund.
The idea was to reserve a portion of the "windfall" oil wealth from political decisions and invest it for future generations.
What Are the Eligibility Criteria for the 2025 PFD?
To qualify for the 2025 Permanent Fund Dividend, applicants must meet the following conditions:
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Be an Alaska resident throughout 2024
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Intend to remain a resident indefinitely
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Not claim residency or receive benefits from another state or country
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Not be convicted of a felony or certain misdemeanors in 2024
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Be physically present in Alaska for at least 72 consecutive hours in 2023 or 2024
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Not be absent for over 180 days unless on an allowable absence
Why Is the Alaska Permanent Fund Important?
The fund represents a unique model of fiscal foresight and public benefit. By saving and investing oil wealth, Alaska ensures intergenerational equity, allowing both current and future residents to benefit from the state’s natural resources. It also acts as a safety net, providing citizens with an annual income regardless of the state's economic conditions.
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Conclusion
Not only is the Alaska Permanent Fund and its annual dividend a world example of thinking wisely and equitably about utilizing natural resource wealth, it is also an example of how that wealth can be protected through appropriate constitutional protection and good independent public investment practices. Alaska has turned its oil boom into a long-lasting legacy by creating, ensuring that the oil wealth is properly safeguarded, an enduring and diversified means to benefit Alaskans in the years to come through sustainable financial management.
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