Alaska attorney general: State settles suit with pension actuary for $500M

By Becky Bohrer, AP
Friday, June 11, 2010

AG: Alaska settles pension suit for $500M

JUNEAU, Alaska — Alaska’s attorney general said Friday that the state has settled a breach of contract and professional malpractice lawsuit against its former actuary for $500 million.

Dan Sullivan said the agreement between the Alaska Retirement Management Board and Mercer Inc., may be the largest of its kind. He called it a “great result” for Alaska state workers and retirees.

The matter dates to late 2007, when the state sued Mercer for at least $1.8 billion, alleging mistakes by the company had contributed to an $8.4 billion state pension deficit. Mercer had been actuary for the state’s Public Employees’ Retirement System and Teachers’ Retirement System pension plans. It had stood behind its work.

Stock market declines and soaring health care costs also contributed to the multibillion-dollar shortfall, the Department of Law said.

Under terms of the settlement, the lawsuit would be dropped in exchange for a $500 million payment. Minus court costs and fees for outside attorneys, the department said the state public pension systems will get about $403 million. Payment is due within 60 days, it said.

The agreement was announced late in the day Friday. A Mercer spokeswoman did not immediately respond to an e-mail seeking comment after hours.

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