Nancy Kassebaum, R-Kan., chairman of the Senate Labor and Human Resources Committee, introduced a bill requiring the Labor Department to clarify that pension fund assets held in insurance companies' general accounts are exempt from federal pension law. Ms. Kassebaum's bill would require the Labor Department to issue that guidance retroactively to Jan. 1, 1975. The bill would not, however, affect any pending litigation.
The bill is intended to reverse a 1993 Supreme Court decision in John Hancock Mutual Life Insurance vs. Harris Trust and Savings Bank, which resulted in insurance companies becoming fiduciaries for certain portions of pension plan group annuity contracts they hold in their central investment pools.
The bill, introduced at the request of the life insurance industry, aims to prevent copycat lawsuits. Ms. Kassebaum hopes the bill might pass the Senate by unanimous consent, said Michael Horak, a spokesman.
Staff of the $88 billion California Public Employees' Retirement System, Sacramento, is recommending the board approve an RFP for currency overlay management services, both active and passive. The contracts for the fund's two currency overlay managers - Pareto Partners and BEA Associates - expire June 30.
The contracts could be extended, but the staff is asking for the RFP instead. Pareto has declined to accept additional assets under management at the current contract fee arrangement with the fund.
The staff and general consultant Wilshire Associates recommend against allocating additional assets to BEA. And the fund's currency overlay program has grown to the point where it may be prudent to contract with more than two managers, the staff said.
The RFP request is expected to be approved next week by the fund's board.
BARRA is developing a model to forecast the cost of stock transactions to allow investors to improve investment decisions and monitor trading execution, said Kamal Duggirala, president.
``There are no tools available to include transaction costs to help make investment decisions,'' he said. With the model, investors can see how much they are losing or gaining by trading. ``You need to understand the sources of transaction costs to make better decisions,'' he added.
For the model, BARRA is looking at trades ``tick by tick'' for information that drives trading, including the motivations of short-term and long-term investors. He expects BARRA to have the model available for pension funds and money managers by early next year.
The State of Michigan Employees' Retirement Systems, Lansing, contributed $200 million in cash and apartments to purchase 80% of a new real estate company. The $25 billion pension fund is the major shareholder in a limited liability company that will be the general partner in the new company, Simpson Housing L.P., according to J. Robert Love, Michigan's trustee to the new company. Simpson Housing Corp., a developer and manager of apartments in the western United States, owns the other 20%.
Michigan contributed 3,414 apartment units it owns in the western United States. Simpson contributed assets valued at $250 million, bringing the total size of the new entity to $450 million.
The $50 billion California State Teachers' Retirement System, Sacramento, approved an RFP for a maximum of two passive equity money managers for emerging market investments. The RFP could be mailed out as early as December, and a contract could be signed by June or July of next year. The deadline for answering questions is anticipated to be Jan. 5, and the final filing date is expected to be Jan. 26. The amount of money at stake wasn' available.
Trustees of the $130 million Newton (Mass.) Retirement System, have approved sending out an RFP for a domestic growth stock manager to replace Phoenix Investment Counsel, which was dismissed recently for performance reasons, said Segal Advisors' Larry Marino, the fund's consultant. The fund is expected to give the new manager about $20 million, slightly less than the $24 million Phoenix managed. Phoenix officials didn't return repeated phone calls seeking their response to the dismissal.
The $2 billion Ohio Public Employees' Deferred Compensation Program, Columbus, will send out RFPs for a new vendor to provide marketing, enrollment and customer services for its 130,000 participants, if the search is approved at a Nov. 20 board meeting. RFPs would be due Jan. 12, and a decision regarding the new provider would be made Feb. 20.
Ginny Shimrock, executive director, said the employee services contract with Copeland Cos. has never been bid out since Copeland began providing services in January 1988. The contract expires next June. Plan officials are interested in finding out what kinds of services are available in the marketplace and possibly in achieving cost savings.
Mercer's Baltimore office is assisting the 457 plan with the search