(Updated 6:21 p.m.) The Commerce Committee voted in favor of legislation Tuesday which will allow the state to take out life insurance policies on state employees to pay back its woefully underfunded state pension fund.

Many lawmakers were uncertain about if it will really help solve the state’s unfunded pension fund liabilities, but they seemed desperate to find a solution.

Rep. Jeff Berger, D-Waterbury, said when he was first approached about this proposal by some individuals in the insurance industry he was told it will help provide upwards of $500 million in the first year.

The actuarially required contribution is close to $1 billion in fiscal year 2012 according to a recent report. The state’s pension fund holds 44.6 percent of the funds it needs to meet its obligations to employees. It’s the first time the fund has dipped below 50 percent funding in more than two decades.

“It’s important we try to do something,” Berger said. “I want to thank this committee for having the foresight to tackle a tough issue, a ticking time bomb.”

Sen. Scott Frantz, R-Greenwich, didn’t disagree. He said it’s really going to require some out of the box thinking to solve the state’s unfunded pension liabilities. He said based on the exponential nature of the math here it’s going to become unmanageable if the issue isn’t addressed soon.

“I think Rep. Berger here has stumbled upon something that is intriguing, it can work. In theory it can work and I think in the practical world it can work,” Frantz said.

He said at the moment he can’t see what can go wrong with it because at the moment it looks like a solid approach.

But the state employee unions aren’t as certain.

“Obviously we are concerned about the state’s unfunded pension liability,” Larry Dorman, spokesman for AFSCME and the State Employees Bargaining Agent Coalition.

“Rep. Berger deserves credit for seeking creative solutions to that problem,” he added. “However, we do have concerns that need to be addressed, both from the moral standpoint of wagering on state employees’ lives to the fiduciary wisdom of steering of pension fund monies away from the Treasurer’s office and into the hands of financial privateers. Our goal is to work together with the governor, the treasurer and state lawmakers to develop solutions that will jump start our economy, create jobs and grow Connecticut’s middle class.”

It’s unclear how far the bill will go.

The substitute bill passed by the committee includes permissive language which allows the state Treasurer to decide whether it’s a wise investment for the state pension fund to make should the legislature decide to agree to the proposal.

The Commerce Committee forwarded it to the Appropriations Committee Monday.