Break for cash balance
Bell Atlantic is attempting to appease older, longer tenured management employees upset about the company's conversion to a cash balance pension plan. According to an internal memo dated Jan. 19, all managers, regardless of age, who had put in at least 15 years with the company on Sept. 1 will be able to claim the greater of their cash balance account or benefit under the traditional pension plan. The company plans to base benefits under the old plan using the participant's average salary between 1987 and 1991.
Big plans at Schroders
Schroders plans to launch hedge funds later this year, and has established an alternative investment division following last week's 1.35 billion ($2.16 billion) sale of its investment banking business to Citigroup.
The group is looking to appoint someone to head the new alternative investment division that will consist of Schroder Property Investment Management and the private equity business Schroder Ventures.
Vassar does hedge fund
Vassar College hired Tupelo Capital Management to manage a $15 million hedge fund that focuses on U.S. growth equities with a long bias, said Jay Yoder, director of investments. This brings the $625 million endowment's hedge fund investments to between 13% and 14% of assets. Funding came from cash.
Hancock Fabrics selected Fidelity Management Trust as master trustee for its $48 million defined benefit and $28 million defined contribution plans. Fidelity replaces Frank Russell, said Bruce Rockstad, vice president of human resources.
Duke exec retiring
Eugene J. McDonald, president of Duke Management, which oversees $3.5 billion in endowment, pension and other assets for Duke University, will retire June 30. The university will conduct a national search for his successor.
Mr. McDonald has been president of Duke Management since it was created in 1990.
KPERS settlement -- finally
Kansas Public Employees' Retirement System ended a long-running suit against five local law firms last week when it agreed to accept a $40 million settlement and to dismiss related malpractice claims. The suit dates back to 1991, when the $9.375 billion pension fund invested $65 million in the Kansas City-based Home Savings Association before it collapsed.
A state investigation into the investment authorized the fund to sue those parties the system felt were responsible for the losses, namely five area law firms. In late 1996, the system settled a suit filed against its former consultant, Callan Associates, for a reported $2 million.
Cal Pedersen, formerly chairman and chief executive of Duff & Phelps Investment Management, left the firm suddenly in early January. He has been replaced by Thomas Steenburg, formerly chief operating officer.
A company spokesman declined to say why Mr. Pedersen left. Mr. Pedersen did not return phone calls.
Cash balance criticized
The AARP says cash balance plans violate age discrimination laws and are illegal.
In comments filed with the IRS and Treasury Department Jan. 19, the association noted that age discrimination laws ban companies from reducing future benefit accruals, and because younger workers stand to accrue more in cash balance plans than older workers, the plans are illegal.
But trade groups representing large employers are warning regulators that cash balance plans are the last hope for keeping pension plans alive.
Meanwhile, the Association of Private Pension and Welfare Plans insists that cash balance plans do not violate age discrimination provisions.
CalPERS does partnership
CalPERS' tie-in with Thomas Weisel Partners will hard-wire the $168 billion fund into the Internet economy.
The long-term strategic partnership with the year-old San Francisco-based merchant bank will have three components:
* CalPERS will buy a 10%stake in the firm for $100 million, boosting the firm's capital to $165 million.
* The fund will commit $500 million and act as a lead investor in new alternative investment funds established by the firm. These could include a mezzanine fund, early-stage private equity fund, a fund of funds and an international private equity fund.
* CalPERS will provide up to $500 million in capital to finance new business activity by Thomas Weisel Partners, subject to the pension fund board's approval.
University of Pittsburgh Health Systems hired Capital Resource Advisors as consultant for its $260 million defined benefit plan and $1.3 billion health-care trust.
CRA replaces Yanni-Bilkey.
Proxy fight at Chubb
Eastern States Health and Welfare Fund of the Union of Needletrades, Industrial and Textile Employees filed suit in U.S. District Court in Newark, N.J., challenging Chubb Corp.'s refusal to allow a proxy vote on a binding bylaw amendment that would require shareholders to vote on the company's ability to implement a poison pill anti-takeover provision.
The employee benefit fund wants to ensure the shareholder resolution is included in the proxy statements.
The resolution seeks to amend Chubb's bylaws to require shareholder approval before the company can adopt or maintain a poison pill.
The fund, with $200 million in assets, owns 11,900 shares of Chubb.
Hillary Horn, UNITE director-corporate and financial affairs, said Chubb in April allowed on the proxy a similar shareholder resolution that was proposed by the fund. It received 71%of the shares voted. Despite the majority support, the company declined to implement the bylaw. A month earlier, in March, the company's board had adopted a 10-year poison pill.
A Chubb spokeswoman said company officials don't comment on lawsuits.
Plan balances rise
Retirement plan participants had an average balance of $47,004 at the end of 1998, 26%higher than at the end of 1996, according to a new report by the Employee Benefit Research Institute and the Investment Company Institute.
The account balances represent only the savings workers have with their current employers.
The study also found that 401(k) plan participants have nearly 75%of their account balances invested in equities. Not surprisingly, younger participants have more of their retirement money invested in stock than older participants, 62.1%for those in their 20s vs. 39.8%for those in their 60s.
The two organizations studied 7.9 million participants in 30,102 401(k) plans totaling nearly $372 billion in assets in 1998