A provision dropped from the Senate tax bill that would let companies withdraw surplus assets from pension funds might be resurrected when lawmakers from the House and Senate negotiate to produce a single tax bill, predicts Ann Combs, principal in the Washington office of William M. Mercer and a former deputy assistant secretary in the Labor Department's pension office.
House Ways and Means Chairman Bill Archer, a key backer of the provision, ``is seeking a way to forge a compromise that would be acceptable to Senate Republicans,'' Ms. Combs wrote in a memo to clients delivered today. Some Republican senators who voted to strip the provision from the Senate tax bill are reconsidering after seeing opponents crow over the 94-5 vote that removed the provision.
The reversion provision could ultimately die if Republicans drop it from a compromise tax package produced after the expected veto of the first tax bill by President Clinton, expected around Thanksgiving.
In an agreement with the Pension Benefit Guaranty Corp., Michelin North America, Greenville, S.C., said it would make a one-time cash contribution of $380 million to eight pension plans of its subsidiary, Uniroyal Goodrich Tire Co. Uniroyal Goodrich's plans were only about 50% funded in 1993, with assets of $540 million and liabilities of about $1 billion. By the end of this year, Michelin will merge the eight plans with its pension plan. The new plan will cover about 41,000 workers and will be fully funded, a PBGC statement said.
The median institutional short-term cash manager posted a 5.9% return for the third quarter, compared with 6.13% in the second quarter, results of the Yanni-Bilkey CASH universe show. These managers extended maturities to an average of 50 days in the third quarter, an increase of three days from three months ago. The CASH universe measures nearly 200 institutional cash funds with short-term assets of more than $360 billion.
U.S. pension funds' international portfolios outpaced their benchmark during the third quarter, primarily because of yen hedging, according to The WM Co. Third-quarter results show the WM Composite - a universe of 135 actively managed non-U.S. portfolios - returned 5.8%, compared with 4.2% for the MSCI EAFE Index.
Yen hedging spelled the difference, while stock picking also aided performance in Japan and Great Britain. Asset allocation, however, hurt overall performance: Low weighting in Japan plus high cash levels lowered returns, a WM release said. For the rolling one-year period, the pension fund portfolios returned 5.2%, lagging EAFE's 6.1% rise. Currency impaired performance, primarily because of exposure to the Mexican peso. While low exposure to Japanese stocks helped relative performance, stock selection was neutral.