Only 53% of corporate pension funds with $1 billion or more in assets hired managers in the year ended October, down from 67% for the period ended four years earlier, according to new data from Greenwich Associates. Overall, the number of institutional investors - including public and corporate funds and endowments - signing up managers fell to 42% for the year vs. 46% four years earlier.
The number of large corporate funds terminating a manager fell to 49% for the year vs. 52% in 1992. For institutional investors overall, terminations rose to 34% last year vs. 30% four years before, Greenwich's survey of 1,609 funds showed.
The Clinton administration is studying the impact of tax rules on different types of pension plans, John Seal, PBGC acting executive director, said in a recent speech at the Enrolled Actuaries meeting in Washington.
Mr. Seal noted that defined benefit plans insured by the PBGC have dropped from a high of 100,000 plans in 1985 to about 50,000 today, primarily due to shutdowns of small plans. Large plans - with 5,000 or more participants - have increased to almost 1,100 from 900 in 1985.
A PBGC spokesman could not provide details on the administration's examination of the impact of tax rules on pension plans.
Citizens Utilities Co., Stamford, Conn., is searching for investment options for its $150 million 401(k) plan, said John DiSturco, manager-investments. The plan wants to add an active U.S. small-cap portfolio and an international equity portfolio. He said the plan is considering several providers and options, including a bundled approach.
Vanguard provides an equity index fund and a bond fund. Other options are an in-house stable value portfolio and company stock. PNC Bank is trustee and record keeper. The plan hopes to make a decision by the third quarter and implement the options by January.
Social Security and Medicare programs will consume almost 14% of the gross domestic product by 2030, nearly twice their current 7% share, a report by the Congressional Budget Office says. In 1996, the federal government spent more than $500 billion on the programs. The CBO report attributed the huge jump in government spending on the programs to the aging population.
Oregon Public Employes' Retirement System officials expect to decide next week whether to commit up to $100 million to JER Real Estate Partners, a fund managed by J.E. Robert Co. focusing on substandard and non-performing loans and distressed assets from banks and insurance companies. The Oregon Investment Council makes investment decisions for the $24 billion fund.
Chicago Park Employees' Annuity & Benefit Fund terminated Abacus Financial Group for $6 million in core fixed income, said Joseph Fratto, executive director for the $515 million fund. The termination was for performance reasons, he said. Abacus officials were unavailable for comment. The assets will be divided among existing managers.
Money management transactions are becoming increasingly complex and global, a study by Investment Counseling says.
Startups, liftouts and joint ventures are becoming more common in the United States and abroad, and buyers are taking smaller stakes in firms, the report says. Deals are becoming more strategic and less driven by adding mass, said the report, which questions whether the industry is consolidating or just reorganizing. The 50 largest money managers handled 43% of the total invested assets in the U.S. in 1996, compared with 50% in 1989.
The study says strong strategic activity will continue over the next few years. If the U.S. markets correct, the M&A activity will slacken and alternative transactions will increase.
Signet Banking put part of its corporate trust business on the block. The business, which includes bond trustee and paying agent services, is a small and profitable part of the banking company but ``not one of our strategically targeted businesses,'' said Teresa G. Jones, director of investor relations.
The company's custody and transfer agent businesses are not for sale, said Kitty Griffith, spokeswoman. Landau Associates will help with the sale, Ms. Griffith said. No buyers have emerged. She wouldn't give a price.