A $60 million shortfall in investment earnings in fiscal year 1994 by New York City's five pension funds is contributing to the city's $1.1 billion budget deficit.
The five pension funds, with total assets of $51 billion, underperformed their 9% actuarial assumption by almost 800 basis points. The blended rate of return of the five funds was 1.2%.
The city contributes about $1.5 billion annually to the five pension funds, according to Jon Lukomnik, the city comptroller's representative to the retirement system. The funds were hurt by the market performance between February and May, he said.
The $700 million pension fund of PacifiCorp, Portland, Ore., hired four stock managers: Sanford C. Bernstein will run $25 million in small-cap value stocks; Nicholas-Applegate, $25 million in small-cap growth; Becker Capital, $12.5 million in small value stocks; and Crabbe Huson, $12.5 million in a deep value contrarian style.
Funding came from terminating Firstar Investment Research & Management and reducing allocations to RCM and Neuberger & Berman.
Trustees of the $14.3 billion Colorado Public Employees' Retirement Association, Denver, hired Heitman Advisory and INVESCO Realty to manage $100 million each in a new commercial mortgage program. The hirings are contingent upon successful contract negotiations. Funding will come from cash flow.
The $4.8 billion Massachusetts PRIM Board promoted ValueQuest to a regular manager from its farm team, said Executive Director Gregory White. ValueQuest will manage $150 million in large-cap value. The board hasn't decided whether to replace ValueQuest on the farm team.
The $450 million Chicago Park Employees' Annuity & Benefit Fund picked ANB Investment Management to run $80 million in various index funds, said Joseph M. Fratto, executive director. As part of the trustees' decision to add index fund management to its mix, ANB eventually will manage 20% of the fund's allocations each to U.S. and non-U.S. equities and U.S. fixed income.
In a complete restructuring, the $30 million pension fund of Columbus Cabrini Medical Center, Chicago, hired two managers and replaced its custodian, said Denise Nedza, controller.
Burridge Group was assigned $9 million in value equities; and National Asset Management, $12 million in fixed income.
The fund dropped sole manager Cheswick Investment. Bank of New York replaces Continental Bank as custodian.
Callan Associates assisted.
James Bowhers, senior vice president of Fidelity Investments, will join John Hancock Mutual Funds as executive vice president and national sales director for institutional sales, a new position, effective Oct. 31. Fidelity officials did not return calls about whether he will be replaced.
James A. Pierre has joined MacFarlane Partners as vice president, portfolio/asset management, a new position. He had been a portfolio manager with The RREEF Funds.
Maureen M. Phillips, formerly vice president-defined contribution products and services of John Hancock Mutual Life Insurance, joined Putnam Investments as managing director and director of defined contribution plan administration effective Oct. 31.
She will free up Tim Griesmer, managing director, to devote his time to Putnam's transfer agency business.