A merger - announced today - of Lockheed Martin Corp. and Northrop Grumman Corp. would create the nation's fourth largest pension fund.
The merged company would have nearly $40 billion in employee benefit assets.
The IRS gives companies up to one year before they must address pension plan issues. If the merger follows the pattern established in the past among aerospace/defense companies, the $18.3 billion Lockheed Martin defined benefit plan ultimately will be merged with Northrop Grumman's $9 billion plan. In addition, Lockheed Martin has about $9.3 billion in defined contribution assets and Northrop Grumman, about $3.2 billion.
Hong Kong stocks, trading Thursday for the first time under Chinese rule after a three-day holiday, went on a wild ride. The Hang Seng Index closed down almost 1%, or 141.05 points, to 15,055.74 after handover enthusiasm pushed the index to an all-time high of 15,363.61 during early trading.
Sacramento County (Calif.) Employees' Retirement System is placing Nicholas-Applegate on its manager watch list, said CIO Jeffrey States. The firm runs $85 million in midcap growth equity for the $2.5 billion fund. The firm is on the watch list mainly because of performance concerns, he said. The board is expected to officially approve the measure next week. Nicholas-Applegate officials are aware of the fund's concerns and are working hard with the county to work through these issues, said a spokesman at the firm.
Bell Atlantic is asking a U.S. District Court in Philadelphia to throw out a class-action lawsuit alleging the company's cash-balance plan gave out smaller lump-sum payouts to some former employees because it used the wrong interest rates and actuarial assumptions to calculate those benefits. The plan specifically included ``anti-cutback'' provisions that protected participants' rights to include early retirement benefits, the company argued in court papers.
What's more, since participants had no accrued right to a lump-sum pension before the company converted to a cash balance plan in 1995, the company's calculation of lump sums without taking early retirement subsidies into account ``is not a cutback'' under federal pension law.
The General Board of Pensions and Health Benefits for the United Methodist Church, Evanston, Ill., and the Board of Pensions of the Evangelical Lutheran Church, Minneapolis, invested a total of $27 million in a State Street Global Advisors fund that will originate mortgages for affordable housing.
Loans created by the fund could produce as much as 4,000 units of new affordable housing in the United States in the next three years, said H. Peter Norstrand, head of State Street's real estate department. The fund seeks to raise $100 million.
Tennessee Consolidated Retirement Systems officials, Nashville, are interviewing candidates for a real estate investment officer to help fulfill the $18 billion fund's 5% target to real estate, said CIO Tom Milne.
The position is expected to be filled by August. The real estate officer will be responsible for identifying separate account relationships and evaluating real estate commingled fund investments, said Mr. Milne.
The real estate target will be filled by reducing the fund's domestic fixed-income allocation.
HIRINGS
Crown Cork & Seal Co., Philadelphia, committed $25 million to the Galen Partners III private equity fund for its $3.3 billion pension fund, said Peter M. Marks, director-corporate finance. The Galen fund specializes in the health-care industry. No consultant was used.
Louisiana State Employees' Retirement System, Baton Rouge, hired IDS Advisory for a $250 million growth equity portfolio. Other finalists were Putnam, Fayez Sarofim and Lincoln Capital. The money had been run by Chancellor LGT. James Wood, executive director of the $5 billion fund, said Chancellor was dropped because of sub par performance. Calls to Nina Lesavoy, Chancellor LGT managing director, weren't returned. New England Pension Consultants assisted.
Assemblies of God Ministers Benefit Association, Springfield, Mo., hired two bond managers for its $400 million pension fund, said Clyde Hawkins, administrator of treasury. Chicago Asset Management and Conseco Capital each will get $10 million. Funding will come from cash flow. Merrill Lynch assisted.
United Food and Commercial Workers, Local 655's $200 million pension fund, Ballwin, Mo., hired Investment Advisers as its first non-U.S. manager, running $15 million, said Donna Frame, administrative manager. Funding came from reducing a $90 million balanced portfolio run by Boatmen's Trust. Existing small-cap manager Dreyfus received $5 million more from the Boatmen's portfolio. Merrill Lynch assisted
