The Alaska officials leveled that allegation against Mercer in a malpractice lawsuit filed Thursday that charges the consulting firm with giving the state negligent advice and making basic math errors. Mercer was the state’s actuary for nearly 30 years until being replaced in 2005.
“Fully aware of the billions of dollars at stake, Mercer nevertheless made fundamental errors in methodology and even in basic calculations, and failed to assign competent, experienced personnel to work for the (retirement) plans,” the state charged in its lawsuit, according to an Anchorage Daily News report.
The lawsuit charged that Mercer badly miscalculated the growth rate of health-care costs, and that the rest of the funding shortfall is due to a combination of factors including skyrocketing health-care costs and the stock market downturn early this decade.
For its part, Mercer argued in a statement released in response to the suit that the shortfall was prompted by many factors, “ including skyrocketing medical costs, a downturn in the capital markets, and the fact that employees are retiring earlier and living longer than anticipated.”
Charged Mercer in its statement: “ The state is now attempting to hold Mercer accountable for these economic trends, over which our firm has no control.”
Mercer charged that it had started advising the state in 2002 to significantly step up its pension contributions. “Mercer stands behind the quality of its actuarial work for the State of Alaska and will defend its interests vigorously,” the statement declared.