Cash balance change fought
The ERISA Industry Committee wants to stop the Treasury Department from proposing regulations on cash balance plans that could "subject many ERIC companies to increased litigation as well as restrict plan design options," a memo sent to members said.
The group believes the Treasury proposal would prohibit wearaways, a period of time in which employees earn no new pension benefits after their employers convert from traditional defined benefit plans to cash balance plans.
"We expect to go there and tell them what we think ought to be in the regulations," said Mark J. Ugoretz, president of the lobbying group. Bill Sweetnam, Treasury benefits tax counsel, could not be reached for comment.
Consultants merging
Milliman USA is combining its investment consulting operations with Dorn, Helliesen & Cottle. While the deal is not expected to be completed until year end, Dorn, Helliesen already has moved its operation into Milliman's San Francisco office. Milliman units operate cooperatively; no national practice leader is being named.
Belgacom converts to multiasset
Belgacom Pension Fund converted all of its balanced mandates to multiasset ones, said Phillip Neyt, general manager. The 139.5 billion Belgian franc ($3 billion) plan wanted to improve its risk management and wants to use only specialist active money managers. Details on the allocation for each portfolio were not available.
Goldman Sachs' 11.4 billion franc active balanced mandate will be split into three portfolios: fixed income, European equities and global equities including Europe. Lombard Odier's 11.5 billion franc active mandate will be split into fixed income, European equities and international equities excluding Europe. Also converted to multiasset mandates were passive balanced portfolios managed by Barclays Global Investors, 11.2 billion francs; State Street Global Advisors, 33.6 billion francs; and Fortis Investment Management, 22.6 billion francs.
Northrop Grumman drop
Northrop Grumman blamed a big decrease in its pension income for a 22% drop in its net profit for the third quarter, ended Sept. 30. Pension fund income, which provides a hefty part of the firm's net earnings, was $89 million, down almost 32% from the third quarter of 2000. For the nine months ended Sept. 30, the company's pension income was $249 million, down 39% from the same period in 2000. Northrop Grumman attributed the pension income decline to market conditions.
Firms on watch list
The $23 billion Illinois Teachers' Retirement System kept Dresdner RCM and Brinson Partners on a watch list because of performance. Dresdner RCM manages a $621 million active international equity portfolio; Brinson Partners, $220 million in active domestic small-cap value equities.
Jon Bauman, executive director, said Brinson's performance "will force a decision sooner or later." Officials from Brinson and Dresdner RCM did not return calls by press time seeking comment.
Fund commits $450 million
The $80 billion New York State Teachers' Retirement System committed up to $200 million to Lexington Capital Partners V; up to $100 million to Blackstone Capital Partners IV; $50 million to A.G. Realty Fund V; and $50 million each to mezzanine debt funds run by Carbon Capital and Legg Mason.
The system also renewed its contract with Callan Associates to monitor the system's external investment managers for one year, effective Feb. 1.
4 emerging firms picked
The $31 billion Los Angeles County Employees Retirement Association hired four managers to run an initial $50 million each for the plan's new emerging manager fixed-income program, said Juan M. Almaguer, senior investment officer for fixed income.
Hired were: MW Post to run a high-yield portfolio; LM Capital, enhanced core; GW Capital, medium-grade; and Hughes, core, Mr. Almaguer said.
CalWest plans to securitize
CalWest, a joint venture of the $152 billion California State Public Employees' Retirement System, Sacramento, and RREEF Funds, plans to securitize a large portfolio of industrial properties for a $1 billion loan program, said Brad Pacheco, CalPERS spokesman. The partnership named Morgan Stanley, J.P. Morgan Chase, Banc of America and Goldman Sachs as finalists to run the program. Mr. Pacheco said there is no deadline for a selection, but he expects one fairly soon. The collateral for the loan would come from the joint venture's $2.6 billion industrial portfolio. Most of the properties are unleveraged, and the mortgage is not expected to exceed $1.3 billion, Mr. Pacheco said.
Dallas fund hires custodian
Dallas Area Rapid Transit hired State Street Bank as custodian of its $116.9 million retirement plan, replacing Deutsche Bank, said Ben Gomez, vice president.
Brinson's McGarrity departs
Thomas McGarrity, managing director and co-head of client relationship management and business development at Brinson Partners, left the firm, confirmed Katie Otto, a spokeswoman. Ms. Otto declined to say why Mr. McGarrity left. People familiar with the situation, who declined to be identified, said his Oct. 23 departure stemmed from a sexual harassment allegation.
Ms. Otto said she did not have information about when Mr. McGarrity left or whether he will be replaced. Deborah Boedicker, co-head of client service at Brinson Partners, remains at the firm.
Lobbying effort begun
Pension groups are lobbying senators to include a provision in an economic stimulus package that would allow plan sponsors to use more favorable interest rates to value pension liabilities and determine contributions to their pension funds.
The provision would be good for only three years. Under current law, employers must use the rate of return on the 30-year Treasury bonds to compute liabilities and insurance premiums paid to the PBGC, but because of the decline in interest rates on Treasury securities, employers would prefer to peg liabilities to a higher interest rate, such as the one on high-grade corporate bonds.
Lobbyists concede their chances of succeeding are remote.
Wilmington nabs Balentine
Wilmington Trust acquired investment counseling firm Balentine & Co. Terms were not disclosed. Balentine advises and manages $4 billion.
