Tuesday, May 21, 2024

Alaska sues pension actuary for $1.8B

JUNEAU, Alaska (AP) – The state of Alaska filed a multibillion dollar lawsuit against its former actuary Thursday, claiming the company’s mistakes contributed to Alaska’s $8.4 billion pension shortfall.

The lawsuit seeks more than $1.8 billion from Mercer (US) Inc., the former actuary for Alaska’s Public Employees’ Retirement System and Teachers’ Retirement System pension plans.

‘Just like any other professional, Mercer was required to use due care, skill and diligence in advising the state how to keep its retirement plans financially sound,’ Alaska Attorney General Talis Colberg said.

‘When it came to calculating expected health care costs for the plans, and in other areas, Mercer failed to meet those standards and caused a significant part of the current unfunded liability of the plans,’ Colberg said.

Messages left with Mercer after business hours Thursday were not immediately returned.

After 30 years advising the state on its public employee and teacher retirement systems, Mercer, a unit of Marsh & McLennan Cos., was replaced as the state’s actuary in 2005 by Buck Consultants, which did an extensive recalculation of Alaska’s pension and health care liabilities. Buck Consultants found that Mercer had underestimated medical costs by about 7 percent.

The state claims Mercer’s miscalculations on future medical costs led the state to develop an unfunded liability in the pension system.

That unfunded liability is the gap between the retirement systems’ total assets and the amount in benefits that would be required to pay all the people in the system. The shortfall would affect both the public employee and teacher retirement systems.

The state Department of Law has retained the law firms of Paul, Weiss, Rifkind, Wharton & Garrison LLP of New York City and Lessmeier & Winters LLC of Juneau to assist with the litigation.

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Sam Allcock
Sam Allcockhttps://www.abcmoney.co.uk
Sam heads up Cheshire-based PR Fire, an online platform that has already helped over 10,000 businesses to grab widespread media coverage on their news at an extremely accessible price point.

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