25 September 2006

Placing Blame

As I've indicated before, I think the state's 7-billion dollar hole in PERS and TRS is a fairly substantial issue. And I'm glad to see that the state is continuing to consider whether or not to seek some sort of legal recompense from the actuaries who appear to be (partly) responsible for this whole mess:

State attorneys have not yet decided whether to sue the actuarial company whose mistakes contributed to Alaska's $6.9 billion pension shortfall.

The Alaska Legislature in May appropriated $400,000 from the Public Employees and Teachers Retirement systems to the Department of Administration "for costs of an investigation related to potential litigation."

Mercer was replaced as the state's actuary last year by Buck Consultants, which did an extensive recalculation of Alaska's pension and health care liabilities. Buck Consultants found that Mercer had underestimated medical costs by about 7 percent.

But let's be clear here. There's no way that suing Mercer is going to result in a 7-billion dollar settlement. Filling that hole is still going to be the responsibility of Alaskans, primarily.

And let's be clear about one other thing: Mercer isn't entirely to blame. Across the board and around the industrialized world, longer life expectancies, increasing health-care costs, and so many other factors and making pension management one of the most difficult issues of our time.

This is not a problem that Alaska can sue its way out of. And I'd like to hear more from the gubernatorial candidates on what they'll do about this.

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