Alaska Retirement Management
Board Settles Lawsuit
Against Former Pension Actuary
Half-a-billion dollar payment
likely the largest on record nationally
June 15, 2010
Anchorage, Alaska - Attorney General Dan Sullivan announced
Friday that the Alaska Retirement Management Board (ARM Board)
has settled the lawsuit against its former actuary, Mercer, regarding
claims of professional malpractice, breach of contract and unfair
trade practices in advising the state on management of the Alaska
Public Employees' Retirement System (PERS) and the State of Alaska
Teachers' Retirement System (TRS), which face billions of dollars
in unfunded liabilities.
The settlement agreement calls for a $500 million payment in
exchange for dismissal of the ARM Board's lawsuit with prejudice.
After deducting court costs and the contingency fee for outside
counsel, the state public pension systems will receive about
$403 million. The payment must be made within 60 days.
"This is a great result for the ARM Board and most importantly
for Alaska state workers and retirees," said Sullivan, who
personally negotiated the settlement. "This is a significant
settlement that will benefit the state and our citizens. We
have been informed that by a large margin it is the largest such
settlement in history for this kind of claim."
The unfunded liabilities were caused by stock market declines,
significant increases in health care costs and, as alleged by
the ARM Board, Mercer's negligence.
"Alaskans owe special
thanks to many officials in the Department of Law who worked
hard on this case for years," said the attorney general.
"I also want to acknowledge former Attorneys General Dave
Marquez and Talis Colberg for their efforts, as well as the support
of the Alaska Legislature, particularly Senator Hollis French."
Sullivan also recognized the
outstanding work of the ARM Board, as well as outside counsel
Paul, Weiss, Rifkind, Wharton & Garrison LLP. "Lew
Clayton and his team at Paul Weiss did terrific work for the
state and our citizens. Their diligent trial preparation was
key to a settlement of this magnitude."
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