Alaska Retirement Management Board Settles Lawsuit Against Former Pension ActuaryHalf-a-billion dollar payment likely the largest on record nationally
Anchorage, Alaska - Attorney General Dan Sullivan announced today that the Alaska Retirement Management Board (ARM Board) has settled the lawsuit against its former actuary, Mercer, regarding claims of professional malpractice, breach of contract and unfair trade practices in advising the state on management of the Alaska Public Employees' Retirement System (PERS) and the State of Alaska Teachers' Retirement System (TRS), which face billions of dollars in unfunded liabilities.
The settlement agreement calls for a $500 million payment in exchange for dismissal of the ARM Board's lawsuit with prejudice. After deducting court costs and the contingency fee for outside counsel, the state public pension systems will receive about $403 million. The payment must be made within 60 days.
"This is a great result for the ARM Board and most importantly for Alaska state workers and retirees," said Sullivan, who personally negotiated the settlement. "This is a significant settlement that will benefit the state and our citizens. We have been informed that by a large margin it is the largest such settlement in history for this kind of claim."
The unfunded liabilities were caused by stock market declines, significant increases in health care costs and, as alleged by the ARM Board, Mercer's negligence.
"Alaskans owe special thanks to many officials in the Department of Law who worked hard on this case for years," said the attorney general. "I also want to acknowledge former Attorneys General Dave Marquez and Talis Colberg for their efforts, as well as the support of the Alaska Legislature, particularly Senator Hollis French."
Sullivan also recognized the outstanding work of the ARM Board, as well as outside counsel Paul, Weiss, Rifkind, Wharton & Garrison LLP. "Lew Clayton and his team at Paul Weiss did terrific work for the state and our citizens. Their diligent trial preparation was key to a settlement of this magnitude."
Posted: June 14, 2010
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