IRS rules against plan
The IRS has ruled Onan Corp.'s cash balance plan should have its tax-favored status taken away effective January 1989. The precedent-setting ruling comes in the first case before the U.S. Tax Court involving a cash balance pension plan conversion.
Onan converted its traditional defined benefit plan into a cash balance plan in December 1994, but made the amendment retroactive to January 1989. The company had asked the IRS for the green light on its conversion in March 1995, but hadn't heard back until now. Two employees of Onan asked the court to rule the pension plan should be ineligible for a tax exemption because of the way it operates.
"Onan believes that the conversion . . . was in full compliance," the company said in a statement.
ARCO staff job hunting
Beverly Hamilton, president of ARCO Investment Management, said staffers Jeff Anderson, controller; Jim Miller, head of fixed income; Chen Gu, Asia portfolio manager; and Rene Goupillaud, who oversees external managers for ARCO's pension and savings plans, are looking for jobs, although the company's merger with BP Amoco has yet to be approved by shareholders.
Ms. Hamilton will leave the company once the deal is done. She plans to serve on mutual fund and investment company boards of directors. Ms. Hamilton and her staff oversee the $2.5 billion defined benefit plan and $1 billion defined contribution plan of Atlantic Richfield.
Kansas City spinoff expected
Kansas City Southern Industries intends to spin off its financial services companies by the fourth quarter, despite resistance from Janus, one of its firms. A new holding company, Stilwell Financial, will be formed to hold KSCI's interests in Janus, Berger Associates, Nelson Money Managers and DST Systems.
Janus executives would like to see Janus spun out alone because it might fetch a higher price, and so stock can be distributed internally.
Middlesex makes changes
The $520 million Middlesex County Retirement Board hired SSgA to run $7.5 million in active, emerging markets equities, said Gustavo Aristizabal, COO of Wainwright Investment Counsel, the fund's consultant.
The fund had chosen PanAgora for the mandate but changed its decision because of the firm's recent turnover in staff. Peter Rathjens, former CIO of PanAgora, left in the spring.
Funding came from terminating Allied Irish, which ran an active Irish equity portfolio with about $20 million.
Middlesex also terminated $17 million global fixed-income manager Van Kampen Funds.
BONY to acquire Estabrook
Bank of New York will acquire Estabrook Capital Management in a deal expected to close in September. Terms were not announced. Estabrook, which manages $2.3 billion, will continue to operate independently, said Newton P.S. Merrill, senior executive vice president at Bank of New York.
Goodyear Canada taps Northern
Goodyear Canada named Northern Trust custodian and trustee for its pension fund, said Barry W. Gilmour, manager-pension fund administration. The pension fund, which had total assets of U.S.$230 million, according to the Canadian Pension Fund Investment Directory, had used Royal Trust as its custodian, he said.
Eleco selects 3
Eleco hired Britannia Asset Management, Dresdner RCM Global Investors and Swiss Life (U.K.) to manage the pension fund's assets, said Pat Leggett, pension fund manager. Merrill Lynch Mercury Asset Management, which had managed the entire fund, was terminated. The fund is believed to be worth L10 million ($16 million). Eleco officials declined to provide details. The company also hired Punter Southall as consultant, replacing Abbey National Benefit Consultants.
Ohio fund keeps Callan
Ohio Bureau of Workers Compensation re-hired Callan Associates as consultant for its $17.5 billion welfare benefit fund, said Robert Cowan, CIO. Callan likely will conduct an asset allocation study that will include looking into international investments. The current mix is 60% domestic fixed income and 40% domestic equities.
Pawtucket hires Anchor
The $57 million Pawtucket Police and Firefighters' Fund hired Anchor Capital to manage $5 million in domestic small-cap to midcap growth equities, said Ron Wunschel, finance director. Funding will come from rebalancing.
Jacksonville picks Putnam
The $56 million Jacksonville Beach Public Employees' Retirement System hired Putnam to run $5 million in international growth equities, said Bruce Corbit, city clerk. Funding came from reducing other international equity investments, he said. Merrill Lynch assisted.
Ferrell Gas hires
Ferrell Gas Inc. hired American Century to replace Ernst & Young as record keeper for its $5 million, eight-option 401(k) plan, said Nina Gibson, plan manager. The change was due to the plan's moving to daily valuation. Salomon Smith Barney Consulting Group assisted.
LACERA queries 5
The $42.8 billion Los Angeles County Employees' Retirement Association will issue an RFI to Watson Wyatt, Gabriel Roeder & Smith, Milliman & Robertson, Segal and William M. Mercer about providing actuarial valuation, consulting and auditing services. CEO Marsha D. Richter told the board the RFI would focus on key issues as well as determine the engagement teams these firms would assign to LACERA and explain their qualifications and fee quotes.
LACERA now has a three-year contract with Watson Wyatt.
Joint venture set
Global Alliance Value Investors has entered a joint venture with The Securities House, a Kuwaiti investment management company, to form Global Securities House, which will make select stocks based on Islamic principles. Global Securities will develop screens to determine the compliance of stocks worldwide, do the asset allocation for clients and hire subadvisers for investment styles not managed by GAVI. The new company expects to have assets under management by September, said Nancy Tengler, CIO for Global Alliance and ceo of Global Securities House.
