The White House last night approved a Republican tax package that includes a provision to eliminate TIAA-CREF's and Mutual of America Life's tax-favored status. That provision is expected to raise $1.2 billion over 10 years. TIAA-CREF officials did not return calls seeking comment.
All other pension provisions in the tax package passed by a joint conference committee remain intact, sources said. An increase in the amount of contributions employers can make to their pension plans is still subject to a presidential line-item veto because it affects very few taxpayers, but such a veto is unlikely. Lawmakers are expected to vote on the package by the end of the week.
New York City Employees' Retirement System trustees are preparing to make their first economically targeted investment since approving a new targeted/alternative investments policy earlier this summer.
The $45 billion fund is considering an investment in Duane Reade Holding Corp., a drug store chain with more than 60 stores in Manhattan. An affiliate of investment bank Donaldson, Lufkin & Jenrette recapitalized the retailer with $350 million this past spring.
Trustees met in closed session last week to discuss Duane Reade. The nature of the investment could not be determined. New York City Deputy Comptroller Jon Lukomnik said he doesn't comment on ``potential investments.''
A spokesman for DLJ said the firm had no comment. Telephone calls to Duane Reade Chairman Anthony Cuti were not returned.
California Gov. Pete Wilson said he might decide today to pay a $1.36 billion legal judgment in a lump sum to the $118 billion California Public Employees' Retirement System, Sacramento, unless Democratic state legislators go along with his proposed $1 billion personal income tax cut proposal.
Paying the bill in a lump sum would eliminate the state's extra cash, ending a disagreement between Republicans and Democrats on how the money should be spent.
The judgment resulted from a state court ruling earlier this year that the governor and Legislature violated the law by delaying pension payments to CalPERS in the mid-1990s.
Former employees of Conrail Inc., Philadelphia, filed a class-action lawsuit against the company and trustees of its ESOP to claim their share of the windfall from appreciated shares the plan sold when the company was acquired by CSX Corp. and Norfolk Southern Corp. The former employees asked a federal court in Philadelphia to block the plan to divvy up an estimated $533 million in unallocated ESOP shares among current employees, charging the trustees breached their fiduciary duty by disproportionately rewarding senior and higher-paid employees who kept their jobs, while depriving long-time employees who were forced into early retirement.
A Conrail spokesman said the company does not comment on pending litigation.
California State Teachers' Retirement System trustees are expected Aug. 7 to approve the key concepts in a planned RFP for a real estate consultant, approve an implementation time line for 1997-'98 objectives, and consider a decision on the role of active U.S. equity management for the plan. Institutional Property Consultants resigned as the $75 billion Sacramento-based system's real estate consultant earlier this year.
The PBGC today announced it is taking over the United Hospitals Medical Center Pension Plan, Newark, N.J. The hospital had filed for liquidation Feb. 19 and closed its doors April 20. The PBGC is taking over the plan even though it has almost enough assets to pay for all promised benefits to about 1,350 participants. A PBGC spokeswoman said the agency does not have all the records to determine the plan's assets and liabilities.
The median Canadian pension fund had a return of 22.9% for the year ended June 30, up from 13% for the previous year, according to SEI Financial Services.
For the year, the median Canadian active equity manager returned 32.5%, significantly outperforming the TSE 300 index's return of 30.1%. The median Canadian active bond manager returned 14.2% for the period, compared with the Scotia Capital Markets Universe Bond Index's return of 14.3%. In the quarter ended June 30, the median Canadian equity manager returned 10.2% compared to the TSE 300's 10.5%.; the median bond manager returned 3.7%, compared to 3.8% for the Scotia index.
HIRINGS
Union Electric Co.'s $925 million pension plan, St. Louis, hired Polaris Capital Management to manage $40 million in a TAA portfolio. Polaris will use quantitative modeling, with a target benchmark of 45% equity, 45% bonds and 10% cash.
National Society of Professional Engineers, Alexandria, Va., hired American Century Investments as bundled service provider for its $3 million 401(k) plan. American Century will provide record keeping, communications and 12 investment selections. The plan also will offer a self-directed brokerage option. A spokeswoman said the fund previously had seven investment options but declined to identify the service provider
