State Files Suit Against Mercer Seeking $1.8 Billion in Damages
December 06, 2007
Thursday
(SitNews) - Alaska Governor Palin today announced the filing
of a lawsuit by Attorney General Talis Colberg and the Department
of Law against Mercer (US) Inc., the former actuary for Alaska's
Public Employees' Retirement System (PERS) and Teachers' Retirement
System (TRS) pension plans. The lawsuit seeks more than $1.8
billion in damages from Mercer for mistakes in calculating the
pension plans' expected liabilities, including mistaken actuarial
assumptions and methods about future health care costs, and basic
mathematical and technical errors.
"I am committed to aggressively pursuing the 'healing' of
Alaska's retirement plans so the burden of the several-billion-dollar
unfunded liability does not fall on the backs of ordinary citizens.
Filing this lawsuit is an important step in that process,"
Governor Palin said.
Attorney General Colberg noted that the lawsuit comes after a
lengthy and careful investigation by the Department of Law.
"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. 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.
Department of Administration Commissioner Annette Kreitzer, speaking
as a trustee of the Alaska Retirement Management Board, the fiduciary
of the pension fund assets, stated, "Earlier this year,
the Alaska Retirement Management Board adopted a resolution supporting
the Department of Law's efforts to proceed with this litigation.
The Alaska Retirement Management Board remains committed to
pursuing these claims and holding Mercer accountable for its
errors. This is an important matter not only for the State of
Alaska, but also for the 161 other political subdivision employers
who participate in PERS and the 58 school district employers
who participate in TRS, all of whom were severely harmed by Mercer's
errors."
The PERS and TRS pension plans cover more than 80,000 retired
and active participants. Funding for these pension plans is
provided by the participants and each of the 220 state, municipal
and school district employers in the plans. The unfunded liability
of the PERS and TRS plans as of June 30, 2006, totaled approximately
$8.4 billion.
The case, Alaska Retirement Management Board v. Mercer (US),
Inc. et al., was filed in Alaska Superior Court, in Juneau.
The 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.
On the Web:
Alaska Retirement Management
Board Resolution http://www.gov.state.ak.us/pdf/Res2007-06ActuaryLitigation.pdf
Alaska Retirement Management Board v. Mercer (US), Inc. et al
http://www.gov.state.ak.us/pdf/Complaint120607.pdf
Source of News:
Office of the Governor
www.gov.state.ak.us
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