Executives may be able to stash more cash in their retirement plans if a provision in the Republican budget package survives the free-for-all between the Clinton administration and Republican lawmakers.
The provision would redefine "highly compensated employees" to just those in the top 20% of a company's payroll; now, all executives making six-figure incomes are considered highly paid.
The difference is important because the amount highly paid employees can put into their 401(k) plans is tied to the amount rank-and-file workers contribute.
The provision was in the budget bill vetoed by President Clinton last month.
The 900 million ($1.4 billion) Vauxhall & Associated Cos. Pension Funds hired Rothschild Asset Management to manage a 15 million ($23 million) global fixed-income portfolio on a fully hedged basis, said Des MacIntyre, manager of pension investment analysis.
The allocation to global bonds stems from an asset/liability study conducted last year by Frank Russell. Until last year, the fund had invested in global bonds on a tactical basis against an unhedged benchmark. Mr. MacIntyre said assets will be shifted from the fund's other managers to implement a new asset mix, but no additional managers will be hired. Details of the new asset mix were unavailable.
WR Lazard is in talks to acquire another money management firm to add to its asset base. The talks are in the preliminary stages, said Melvin Neal, vice chairman. He would not identify the firm targeted.
Lazard had been rumored to be discussing a merger with Smith, Graham Asset Management, another minority-owned firm. Both Mr. Neal and Ladell Graham, chairman of Smith Graham, denied the rumor and said they had not held talks.
The $218 million pension fund of Ohio Casualty Group hired five managers to run a total of about $86 million, including the fund's first moves to international and emerging equity markets.
Barry Porter, CFO and treasurer, said Bank of Ireland Asset Management and Brandes Investment Partners were hired to manage $13.5 million each in international equities; Templeton International was hired for $8.3 million in an emerging markets mutual fund.
Ark Asset Management and Montag & Caldwell were hired to manage $26 million and $25 million, respectively, in core equities.
Also, Friess Associates was given an additional $3.5 million in equities, bringing Friess' total allocation to $26.5 million. Assets for the changes came primarily from two firms: $58 million from Leavy Investment Management, which closed last year, and $29 million from Dreman Value Management, which was terminated. Dreman ran a $20 million core account and a $9 million small-cap account, Mr. Porter said.
The $9 billion Mississippi Public Employees' Retirement System hired Frank Ready as executive director, said Chuck Rubisoff, interim director and special assistant attorney general.
Mr. Ready replaces Milton Walker, who resigned in June, Mr. Rubisoff said.
Mr. Ready now is director of the New Mexico Educational Retirement Board, which has about $3 billion in assets. A board staff member said a search to replace Mr. Ready has begun.
Capstone Asset Management acquired New Castle Advisers, which has $200 million under management in short-term cash, intermediate-term bonds and synthetic GICs.
Terms were not disclosed.
All staff will remain; Howard Potter, New Castle's president, has become a managing director of Capstone.
Capstone also hired David J. Deluccia as senior vice president responsible for institutional client service and marketing, a new position. He had been first vice president and consultant to institutions with Prudential Securities.
Sharon K. Keith, senior vice president responsible for equity analysis and special projects, left the firm to spend more time with her family; her responsibilities will be absorbed by the staff.
The $500 million St. Paul Teachers' Retirement System hired two domestic fixed-income managers, said Eugene R. Waschbusch, secretary and treasurer.
State Street Research & Management was assigned $100 million; Voyageur Asset Management got $50 million. The money had been run by CSI, which was absorbed by Prudential.
Calsonic Inc. will double the number of its defined contribution investment options to six, and hired Scudder, Stevens & Clark to administer and act as trustee and record keeper for the company's $25 million plan, said Pamela Sasuga, corporate benefits administrator.
Three options will be managed by Scudder, Ms. Sasuga said. Two other new options are the Templeton Foreign Fund and the AIM Constellation Fund, she said.
A stable value fund option will be taken over by Scudder, but Calsonic's existing outside manager, the Industrial Bank of Japan, will continue to run existing insurance contracts until they expire. Two other options by IBJ will be dropped.
William M. Mercer was the previous administrator and record keeper. Mercer will continue to act as a consultant for the fund.
The $350 million Middlesex County Retirement System invested $1.5 million in venture capital in the North Atlantic Venture Fund II; $10 million in Irish equities with the Allied Irish Bank; and $3 million in Dragon Pacific, a Vietnamese venture capital fund, said Nancy O'Neil, investment coordinator.
Funding mostly came from cutting the allocation to domestic bonds to 30% of assets from 34%, allowing the system to bump up its international equities allocation to 18% from 16%
Switzerland was the top-performing equity market for U.S. investors in 1995, returning 42.4% in U.S. dollar terms, according to Morgan Stanley Capital International. Currency played a big role, as the Swiss franc increased 13.7% against the dollar.
The U.S. stock market was second, rising 34.7% for the year.
A year-end rally pushed returns in 20 of 22 countries in December. Overall, the MSCI World Index rose 18.7% and the EAFE, 9.4%.
Top developed-market performers for the fourth quarter were Switzerland (9.3%), Singapore (9.2%) and Spain (8.3%). Finland was the weakest performer for the quarter, losing 29.3%.
Emerging markets were disappointing, ending with a loss of 6.9% for the year, according to the MSCI Emerging Market Free Index. The strongest returns came from Peru (22.1%) and Israel (21.8%), while the weakest emerging market were in Pakistan (-38.2%), Sri Lanka (-32.7%), and India (-31.9%).
The $70 billion New York State and Local Retirement Systems, Albany, renewed its contract with real estate consultant Institutional Property Consultants following a search, said a spokesman for Comptroller H. Carl McCall, trustee of the retirement system. The contract is for three years. Mellon Mortgage Co. was hired as the retirement system's mortgage servicer, replacing Chemical Bank.