The Clinton administration is objecting strenuously to a Republican move to take away the tax-exempt status of TIAA-CREF. The provision, part of the House Ways and Means Committee's version of the tax bill, is among the top four ``first-tier'' objections on a Treasury Department list obtained by Pensions & Investments.
The General Accounting Office hopes to report by early November the findings of a study on defined contribution plans, according to a source who declined to be identified. The study is looking at the extent defined contribution plans are invested in employer securities and real estate and ways to make participants' retirement savings more secure in situations where the employer, not employees, choose how to invest the money.
The study was launched at the request of the House Ways and Means Committee. Also part of the study: the differences between fiduciary rules for defined benefit and defined contribution plans, outside of ESOPs.
Chicago Laborers' Annuity & Benefit Fund will take a look at its asset mix and will consider increasing its equity exposure because of the recent passage of the prudent investor rule, said James Capasso, executive director. The $1.3 billion fund's asset mix now is 60% stocks and 40% bonds.
The fund also is looking at managed futures and has completed interviews with RXR and Baldwin, in a joint meeting with the Municipal Employees' Annuity & Benefit Fund of Chicago. Officials still are discussing whether to invest in the asset class. Becker, Burke is assisting. The U.K. minimum funding requirement for pension funds will be reviewed in light of elimination of tax credits on U.K. advanced corporation tax, government and key actuarial bodies have announced.
With government endorsement, officials of the Faculty and Institute of Actuaries, a standards-setting body, will conduct a review of actuarial practices in the next nine to 12 months. The review will cover standards for calculating funding levels on both an ongoing basis and to comply with the new MFR test. Actuarial officials will meet with John Denham, the junior minister in charge of pension policy, next Tuesday. In the meantime, government officials agreed U.K. pension funds should use existing rules for calculating pension fund compliance with the new MFR.
A U.S. District Court judge in New York sentenced Ralph Corace, trustee of Job Shop Technical Services Inc., Farmingdale, N.Y., to 37 months in prison, three years' probation and a $60,000 fine for failing to deposit $2.7 million in employee contributions into the company's 401(k) plan for two years and using the money to run the company instead.
The sentencing is the latest piece of the largest case brought by the Labor Department against employers who misuse employee contributions to 401(k) retirement plans. The Labor Department filed a lawsuit against Job Shop and Mr. Corace in October 1995. At that time, Job Shop's 401(k) pension plan had $4.3 million in assets and covered 755 participants.
United Asset Management will buy a 49% interest in Lincluden Management, the 18th largest institutional investment manager in Canada. Terms were not disclosed. The deal is expected to close in the third quarter. Lincluden manages $4.5 billion in equity, fixed-income and value portfolios.
The Alaska Forest Association, Ketchikan, is conducting an asset allocation study as a prelude to changing its $30 million pension plan's ``very conservative'' portfolio, said Judy Auger, benefits administrator.
The fund will be looking to increase its U.S. equity allocation with its current managers, I.C.M. Asset Management and Columbia Management, which run balanced portfolios. The current asset mix is 37% U.S. stocks, 4% international stocks, 36% bonds, 18% GICs and 5% cash. Wurts & Associates is assisting.
Flows into U.S. equity mutual funds for the first six months of 1997 were down 22% at $84 billion, compared with the same period in 1996, when investors put $108 billion into stock funds. Liquidity Trim Tabs calculated that at the current rate, the total inflow into U.S. equity funds for 1997 will be about $138 billion. That represents about 9% of the total amount invested in U.S. stock funds at the end of 1996, the lowest such ratio since 1990.
HIRINGS
City of Alexandria (Va.) Supplemental Retirement Fund chose CIGNA Investments as investment manager and administrator for its $30 million supplemental retirement plan. The investment portfolio has yet to be developed, said Dan Neckel, director of finance. CIGNA replaces The Principal Group.
WHO'S NEWS
Michael Donovan was named senior director for private equity for the University of Notre Dame's $1.5 billion endowment fund. It is a new position. Mr. Donovan, a recent graduate of Harvard Business School, has previous business experience and a law degree, said Scott Malpass, associate vice president for finance and CIO
