SitNews - Stories in the News - Ketchikan, Alaska


State Files Suit Against Mercer Seeking $1.8 Billion in Damages


December 06, 2007

(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

Alaska Retirement Management Board v. Mercer (US), Inc. et al


Source of News:

Office of the Governor


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Stories In The News
Ketchikan, Alaska