The Associated Press reports that Mercer served as the state’s actuary for about 30 years. It was replaced by Buck Consultants in 2005.
Buck Consultants said an extensive recalculation of pension and health care liabilities it performed when it took over as actuary revealed that Mercer had underestimated medical costs by around 7% or $399 million, according to the AP.
Additionally, a 2002 audit by another company found that Mercer’s assessments of future medical health care trends were too low. Rates had to be recalculated and resulted in a triple to quadruple increase in employer contributions that year.
In September 2005, Alaska State Representative Mike Kelly called for a legislative audit of the state’s Public Employees’ Retirement Systems to rule out criminal misconduct in connection with the system’s shortfall and to determine if the systems should replace Mercer as financial consultant (See State Representative Asks for Alaska Pension Systems Audit ).
Mercer is also facing a lawsuit filed in March in Wisconsin that claims the firm grossly underestimated the cost of a Milwaukee County wage-and-pension plan (See Milwaukee Board Hits Mercer with Pension Lawsuit).