Birmingham (Mich.) Employees' Retirement System could become one of the first public pension plans in the nation to convert its traditional pension plan to a cash balance plan.
The city, with $89 million in pension assets, is considering switching because ``it seems to be more responsive to what employees are looking for today, with greater portability and shorter vesting,'' said Dan Schulte, director of human resources.
Under the proposal, participants would get a choice of letting their account balances grow based on the interest rate on Treasury bills, or the average return (net of expenses) the retirement system had earned in the preceding three or four years, Mr. Schulte said. Employees also would be covered by a safety net, probably a minimum 4% return, he said.
Because the plan has been fully funded for years, switching to a cash balance plan would let the city use up the surplus assets to credit employees' accounts, Mr. Schulte said.
Manhattan and Bronx Surface Transit Operating Authority, Brooklyn, N.Y., narrowed its search for its first S&P 500 index fund manager to five finalists and is expected to make a final decision next month, said Anthony Patten, director of pension services for the $500 million fund. Mr. Patten declined to name finalists.
Size and funding for the allocation have not been determined, said Mr. Patten.
Computer Sciences, El Segundo, Calif., hired its first international large-cap equity manager, but will wait until November to name the new manager when staffing changes for its 401(k) plan are expected to be complete, said Bruce Plowman, vice president of marketing and corporate communications for the $450 million plan. Mr. Plowman did not disclose the portfolio size and funding source.
E. M. Warburg, Pincus announced the closing of Warburg, Pincus Equity Partners, its eighth and largest fund, which raised $5 billion. The fund will continue its strategy of investing in private equity of companies at all stages of development from start-up to early stage to recapitalizations and buyouts.
Pension funds that are limited partners in Warburg Pincus' private equity funds include IBM, AT&T, General Electric, State of Michigan Department of Treasury Bureau of Investments, Public Employees' Retirement Association of Colorado, State Teachers' Retirement System of Ohio, Washington State Investment Board and the New York State Common Retirement Fund.
Bond funds outperformed stock mutual funds for the second quarter in a row, according to Lipper's end-of-quarter performance results. All general domestic taxable fixed-income investment objectives showed positive returns in third quarter except multisector income funds and high current yield funds.
This is the first time since 1994 that bond funds have outperformed equity funds in back-to-back quarters and by the biggest spread since third quarter 1990.
Third Avenue Trust yesterday launched Third Avenue Real Estate Value Fund, its fourth mutual fund.
Unlike most real estate funds that invest almost exclusively in REITs, the new fund will focus instead on undervalued realty stocks that are expected to generate long-term capital appreciation, said Martin J. Whitman, chairman and CEO. Mr. Whitman will comanage the new fund with Michael Winer.
Acorn Investment Trust created two new mutual funds, both managed by Wanger Asset Management. The funds are the Acorn Twenty and the Acorn Foreign Forty Funds. The Acorn Twenty Fund's comanagers are John H. Park and Mark H. Yost. Marcel P. Houtzager and Leah J. Zell are comanagers of the Acorn Foreign Forty Fund.
CORRECTION: Atlanta Capital Management was hired as a large-cap growth manager for the Louisiana Sheriff's Pension & Relief Fund. The manager's name was incorrectly reported in the Oct. 6 P&I Daily