Judge Denies Mercer's Request to Dismiss Alaska Suit
December 21, 2009 (PLANSPONSOR.com) – A superior court judge in Alaska has denied Mercer's request to dismiss a lawsuit in which Alaska officials accuse the former actuary of the state's pension system of mistakes that helped create its funding gap.
The New York Times reports that the judge ordered a trial
to be held next July to determine whether Mercer had harmed the system. The
Alaska Retirement Management Board charges the consulting firm with giving the
state negligent advice and making basic math errors.
According to the Times, earlier this year, citing
depositions of Mercer employees, the board also contended that company
executives knew about the actuaries’ errors and covered them up. In a
statement, Mercer conceded that its error and its failure to disclose it was “a
mistake in judgment that Mercer regrets and it is not consistent with the
company’s corporate culture,” the news report said.
However, at the time the suit was filed, Mercer argued that
the pension fund’s 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.” Mercer
accused the state of attempting to hold it accountable for these economic
trends, over which it had no control (see Alaska Funds Sue Mercer over Actuarial Work).
Mercer claimed it had started advising the state in 2002
to significantly step up its pension contributions.