Funds lose $100 billion
Pension plans of companies in the S&P 500 lost more than $100 billion on their pension investments in 2002 and ended the year with a $206 billion shortfall, according to an S&P report. Overall, the pension shortfall works out to roughly $10,000 per employee, S&P officials said.
Thirty-five of those companies ended 2002 with pension surpluses, compared with 264 in 1999, S&P spokeswoman Lynn Cohn said. Also, 308 companies were underfunded at the end of last year, compared with 79 at the end of 1999, according to the report. The full list of company pension figures is available at www.standardandpoors.com.
Hewitt buys N. Trust unit
Hewitt Associates will purchase Northern Trust Retirement Consulting, said Jennifer Frighetto, Hewitt spokeswoman. Terms were not disclosed. Northern Trust will continue to offer investment options and trust and custody services to defined benefit and defined contribution plans. Also, Hewitt and Northern Trust formed a non-exclusive preferred provider relationship in which each firm will recommend the other's services to their clients.
Manager performance poor
Asset management companies are expected to have the second-worst median performance among all public financial services companies for the first quarter, according to earnings estimates from Putnam Lovell NBF Securities. Money managers' median earnings-per-share growth is expected to be -12%; multinational and trust banks are expected to have the worst median EPS growth, at -17.9%.
In contrast, commercial banks are expected to have a median EPS growth of 7.6%, and securities brokerages, -10.4%.
CapGuardian on watch
The $47 billion Ohio Public Employees' Retirement System placed Capital Guardian Trust, which runs $200 million in active domestic small-cap value equities for the system, on watch for performance, said Jim Wright, assistant investment officer.
Capital Guardian's portfolio has consistently underperformed its Russell 2000 benchmark, Mr. Wright said.
Jennifer Grigas, Capital Group spokeswoman, said officials there had no comment
Boeing, Alcoa, NCR pony up
Boeing will likely make $1 billion in pension contributions in 2004, company officials announced. Boeing also plans to make discretionary funding contributions this year, but company officials gave no details. Boeing contributed $340 million to its $28.8 billion in pension funds in 2002. Company officials didn't return calls seeking details by press time.
Alcoa plans to contribute $100 million to its U.S. and international pension plans this year, company executives said. The company contributed $59 million to its plans in 2002. NCR contributed $24 million to its $3.4 billion pension fund in the first quarter
Alcoa ended 2002 with $7.5 billion in pension assets and $9.4 billion in benefit obligations, according to its annual 10-K report. Alcoa took an $820 million charge to equity in the fourth quarter to help fund the pension plan. The company also lowered its expected long-term rate of return on Jan. 1, to 9% from 9.5%, according to its annual report.
NCR reported $20 million in pension income in the first quarter of 2002. That swing was the main factor driving a first-quarter operating loss of $32 million, compared with a $9 million gain in the first quarter a year ago, NCR officials said. NCR slashed its discount rate this year, to 6.75% from 7.25%; it also cut its long-term expected rate of return to 8.5% from 10%, according to its annual 10-K report.
Colorado slates reviews
The $23 billion Colorado Public Employees' Retirement Association will re-evaluate its service providers and consultants on a planned rotation, said Katie Kaufmanis, director of communications.
Every five years, officials will review the global custodian, currently Northern Trust; its pension investment performance consultant, currently R.V. Kuhns; and its pension investment consultant, now Mercer Investment Consulting. Money managers, risk managers and other providers will be evaluated every three years, she said.
Union to GE: 30 and out
General Electric's largest union plans to ask for guaranteed pensions that would allow union members to retire after 30 years of service, regardless of age, said Lauren Asplen, spokeswoman for the International Union of Electronic-Communications Workers. She said the union and GE will begin labor negotiations May 19. The current contract runs out June 15. Tim Benedict, GE spokesman, did not return calls seeking comment by press time. GE has $36.7 billion in pension assets.
NY Teachers picks 3
The $66 billion New York State Teachers' Retirement System committed up to $75 million to GTCR Fund VII and up to $25 million to Olympus Growth Fund IV, said Dave Daly, spokesman. The system also committed up to $100 million to Hines' U.S. Office Value Added Fund. Funding will come from cash.
Separately, NYSTRS rehired REIT managers Cohen & Steers for a $300 million portfolio; Lend Lease Rosen, $152 million; and RREEF, $150 million. It also rehired Morgan Stanley for a $690 million international equity portfolio. No RFPs were issued.
AMG to repurchase shares
Affiliated Managers Group authorized a share repurchase program, allowing the firm to repurchase 5% of its outstanding shares of company stock. Timing and the amount of stock purchased will be determined by AMG's management, according to a news release. William Nutt, CEO, said in a statement that the repurchase program allows the firm to enhance cash flow and reinvest in its affiliates.
Separately, AMG's profits dropped about 3% in the first quarter, to $24 million, compared with $24.7 million in the first quarter of 2002, according to a news release.
Hampden hires for bonds
The $175 million Hampden County (Mass.) Contributory Retirement System hired Barrow Hanley to manage $24 million in core fixed income, a fund spokeswoman said.
Further details were not available.
Segal Advisors assisted.