California Public Employees' Retirement System, Sacramento, is developing an optional alternative retirement plan for an estimated 100,000 non-teaching school employees who work less than half time.
The program, the result of legislation passed earlier this year by the state Assembly, permits school districts to contract with CalPERS, which has $126 billion in assets, to offer the benefit.
New York City Employees Retirement System and the New York Police Pension Fund trustees set new asset allocations for the funds, said Deputy Comptroller Jon Lukomnik.
The $34 billion NYCERS' fund will allocate 55% to U.S. equities, 13% to MSCI-EAFE equities, 26% to structured domestic bonds, 4% to enhanced yield and 2% to alternative investments. The allocation was: 53% U.S. equities, 10% EAFE stocks, 32% U.S. bonds, 3% enhanced yield and 2% to alternatives.
The $14 billion police fund's new mix is 45% to U.S. equities, 19% to EAFE stocks, 4% to emerging market equities, 25% to U.S. bonds, 5% enhanced yield and 2% alternatives. The allocation had been: 53.5% U.S. equity, 12% EAFE, 3% emerging markets, 24% structured U.S. bonds, 5% enhanced yield, 1.5% alternatives and 1% real estate.
Neither fund has investments in alternatives, but NYCERS is evaluating four recommendations from Pacific Corporate Group. The police fund's new allocation will contain REITs, but the trustees haven't decided if it will be part of U.S. equities or a separate allocation.
The Labor Department issued a proposal to protect insurance companies from being subject to ERISA for plan assets invested in their central investment pools.
The proposed rules would require insurers to tell clients how they will allocate expenses and income among the commingled investments. Insurers also would be required to let pension plans withdraw the investments with 90-days' notice and to take the money as a lump sum or over five years with interest.
The proposal, which would implement part of a federal law passed last year, covers pension plan investments in insurance companies' general accounts before Dec. 31, 1998. The proposal also would require insurance companies to give pension plans a 60-day notice before they intend to make certain changes.
The rules will be finalized after a public comment period.
Pillowtex Corp., Dallas, will continue making annual contributions to the two underfunded pension plans of Fieldcrest Cannon Inc. as part of an agreement with the PBGC.
Pillowtex is acquiring Fieldcrest Cannon, whose underfunded plans cover 26,000 workers and retirees. Pillowtex is giving the PBGC a $15 million bank letter of credit and a $25 million lien on its manufacturing plants and equipment as a backup in case the company is forced to shut the plans.
National Bureau of Economic Research Inc., Cambridge, Mass., moved $20 million from a MSCI-EAFE index portfolio, managed separately by Barclays Global, to Barclays' new BGI All Country World Index ex-US (ACWI ex-US) mutual fund. The allocation came from the group's capital fund. Sam Parker, CFO, declined to say how large the fund is.
Birmingham (Mich.) Employees' Retirement System reallocated its U.S. equity portfolio among existing managers after a search for a large-cap value manager. The $80 million fund will give Munder Capital about $18 million in the new large-cap value mandate and a $9 million core small-cap portfolio. Munder previously managed a large-cap growth portfolio for the system.
A large cap-growth portfolio run by MacKay Shields will be reduced by $1 million to $20 million in the reallocation to Munder.