SACRAMENTO, Calif. -- The California Public Employees' Retirement System's trustees are recommending equalizing the big differences that exist between retirement program benefits for active and retired employees, said Brad Pacheco, spokesman at the $153 billion pension fund.
The issue will be discussed at the investment committee meeting scheduled for May 17, after which a resolution will be presented to the governor and the Legislature, Mr. Pacheco said. Because the system has a surplus, it is trying to improve benefits for all members, he said.
Separately, trustees approved three finalists for its $2 billion emerging manager development program. Finalists to oversee the program and enter into a partnership with the fund are State Street Global Advisors, Strategic Investment Management and Progress Investment Management.
The fund's program for emerging money managers will place about $2 billion in CalPERS assets with the managers and invest $40 million in CalPERS venture capital money in exchange for equity interests in the managers. The managers will use the $40 million for technological, accounting and other improvements. Trustees are expected to interview the finalists to run the manager development program on a daily basis May 20 and make a selection at that time.
University fund contemplates exposure to alternatives
SEATTLE -- Seattle University officials will meet next month to discuss possibly increasing its alternative investments exposure to diversify its $115 million endowment, said Denis Ransmeier, vice president of finance.
Mr. Ransmeier said he would like to increase the exposure to 15% from 5%, but said 10% is a more realistic goal at this point. The portfolio style is undetermined.
Commonfund manages a hedge fund portfolio and Ticonderoga Capital manages a venture capital portfolio for the endowment. Portfolio sizes were not available. No timetable was set for a decision.
Wurts & Associates is assisting.
Optional plan bill down but not out in Texas
AUSTIN, Texas -- A bill that would have created an optional defined contribution plan for Texas state workers failed to gain enough support on the state Senate floor.
Senators expressed concern about the long-term actuarial health of the Employees Retirement System of Texas, the defined benefit plan for state workers, said a representative for Sen. Jeffrey Wentworth, R-San Antonio.
Because the vesting period for the defined contribution plan is one year, senators were concerned participants would receive the state's 6% matching contribution and leave the plan soon thereafter, the representative said.
Mr. Wentworth hasn't decided whether he will reintroduce the bill this session -- scheduled to adjourn May 30 -- or wait until the next legislative session.
New full-service 401(k) plan for small non-profits
MARLBOROUGH, Mass. -- Fidelity Investments Tax-Exempt Services is offering a full-service 401(k) plan for small, non-profit organizations.
MaximumK is targeted to tax-exempt organizations with up to $10 million in assets that employ fewer than 1,000 people. The cost will be calculated on an individual basis, determined by the number of plan participants and plan assets.
While it does not have the customization larger plans receive, MaximumK does include record keeping, investment management, communication, education, consulting and a choice of up to 25 Fidelity mutual funds.
PBGC grants immunity for companies that volunteer
WASHINGTON -- The Pension Benefit Guaranty Corp. announced it will grant immunity from penalties to companies that voluntarily correct their underpayment of premiums. It also will cut the penalty to 1% of the underpayment per month from the current 5% if the companies fix their problems before they are told about it from the PBGC. Federal law requires that the agency still charge interest on underpayments.
Montana adopts optional plan for state and local employees
HELENA, Mont. -- Gov. Marc Racicot signed legislation to create an optional 401(a) defined contribution plan for state and local government employees and remove the current retirement plan's $185 million unfunded liability. The current $2.4 billion plan is a hybrid defined benefit/money purchase plan.
The new plan will be in effect as of July 1, 2002, said Michael O'Connor, executive director of the Montana Public Employee Retirement System. The defined contribution plan will not cover safety personnel such as fire and police employees or teachers. The 401(a) will be administered by the board of the employee retirement system, which also oversees seven other plans.
Under the new law, current employees and new hires will be able to choose the plan in which they wish to invest, he said. The contribution rates will be the same -- 6.9% -- from employers and employees, Mr. O'Connor said. For the next 12.75 years, about 2.37% of the employers' contribution will be used to pay off the unfunded liability, he explained.
