US - Alaska state governor Sarah Palin has requested US$12m from the legislature to sue Mercer Human Resource Consulting over the state's multi-billion dollar pension deficit.
An investigation was begun last year into Mercer’s almost 30 years of work as adviser to Alaska’s public employee and teacher retirement systems.
A spokesman for the governor said: “According to one estimate, public employees and teacher pensions are expected to be under-funded to the tune of $8.5bn, although it may be as high as $10bn.
“Based on advice from experts, the state has actionable claims against Mercer Human Resource Consulting. We feel the firm failed to warn us of this looming problem.”
The spokesman stressed, however, that Mercer was not being blamed for the entire shortfall.
Mercer released a statement that it “stands behind the quality of its actuarial work for the State of Alaska and, should this matter move to litigation, … will defend [its] interests vigorously”.
The statement continued: “It would appear that Mercer is being held accountable for market conditions, demographic changes in Alaska's public employment workforce, benefit changes, and State of Alaska investment funding policies over which we did not have any control.
“In 2002, 2004 and 2005 the State of Alaska hired other independent actuarial firms to examine Mercer’s work for the State and these firms determined that Mercer's methodologies, calculations, and assumptions were reasonable and actuarially sound.”
The state has employed New York-based law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP to represent it in its claim.
Mercer was replaced as adviser to the state by Buck Consultants in 2005.
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