Air Line Pilots Association International wants federal legislation that would give airlines more time to fund up their pension plans. The union is also asking its members to consider allowing them to switch from defined benefit plans to defined contribution plans, or a combination of traditional pension and 401(k)-type plans with a larger defined-contribution component. "While the pilots at each airline will have to determine how much they want to shift, and how they want to accomplish that, it's pretty clear that defined benefit plans are under a tremendous amount of stress because of what is happening in the airline industry," said John Mazor, union spokesman.
The PBGC has filed liens with the Illinois Secretary of State against three UAL Corp. subsidiaries that aren't in bankruptcy protection — Covia LLC, United Air Lines Ventures and ULS Ventures — in an effort to collect contributions the airline owes its underfunded pension plans. The liens were filed Aug. 30 for $303.9 million each.
The underfunded plans are: the United Airlines Management, Administrative and Public Contact Defined Benefit Pension Plan; the United Airlines Flight Attendant Defined Benefit Pension Plan; and the United Airlines Ground Employees' Retirement Plan.
"We are currently evaluating the filings to determine what action is appropriate," said Jean Medina, a United Airlines spokeswoman. "It is important to note that the filings are not against United and do not impact our operations," she said.
The $1.9 billion Baltimore City Fire & Police Employees' Retirement System hired hedge fund-of-funds managers Union Bancaire Privee and Cadogan Management to run a combined $75 million, subject to contract negotiations, said Thomas P. Taneyhill, executive director.
UBP will run $50 million; Cadogan $25 million.
Contracts should be finalized by the end of this month, he said. Funding will come from the system's large-cap equity portfolio. Summit Strategies Group assisted.
SBC Communications Inc. contributed $700 million in cash to its post-retirement benefit plans on Sept. 1, bringing its 2004 combined pension and post-retirement voluntary contributions to $2 billion, according to an SEC filing.
The company had expected to contribute $2 billion to those plans this year.
Assets in CalSTRS' 403(b) plan jumped 26.7% for the year ended June 30, to $94.5 million. A Vanguard S&P 500 index fund garnered the most assets, nearly $40 million.
However, 13% of assets in the Sacramento-based California State Teachers' Retirement System's Voluntary Investment Program were invested through its mutual-fund window.
The biggest percentage increases among the fund's 12 investment options were a State Street Research small-cap value stock option, up 175% to $1.7 million; a Delaware Investments midcap growth equity fund, up 163% to $574,000; and a Gartmore Morley stable value fund, up 112% to $1.4 million.
Christopher Wilson was named head of mutual funds at Columbia Management, said Donya Hengehold, spokeswoman.
He will oversee the Nations, Columbia and Columbia Acorn Funds families of funds. He replaced Kevin Connaughton, who was named head of fund administration oversight, fund compliance and fund accounting. Mr. Wilson was president and CEO of CDC IXIS Asset Management Services, which he launched in 1998, Ms. Hengehold said.
Crystal Sullivan, CDC IXIS spokeswoman, said the firm doesn't comment on employee matters.
Martin Currie launched the Martin Currie Daijiro Absolute Return Fund, its seventh hedge fund, and immediately closed it to new investors.
The fund for Japanese investors attracted $130 million, with $87 million invested and another $43 million committed.
Existing investors will be permitted to invest additional assets in the fund, which will be closed to all investors when assets reach $150 million.
The fund's co-managers, Keith Donaldson, John-Paul Temperley and Kevin Troup, will invest in Japanese large-cap and small-cap equities.
"To launch and soft-close a new fund on the same day is an achievement," Willie Watt, CEO, said in a statement.
Martin Currie now manages more than $1 billion in equity hedge funds.
New Orleans City Employees' Retirement System is likely to drop one or two of the worst-performing hedge funds in its alternatives portfolio, said Jerry Davis, board chairman, although he didn't specify which funds.
The board of the $365 million plan will meet Sept. 8 to discuss the hedge fund issue and other possible changes for the fall. There are no plans to search for new hedge fund managers if any are dropped.
Sara Lee Corp. expects to contribute $236 million to its pension plans in its fiscal year ending July 2, 2005, compared with $112 million the year earlier, according to the company's annual report filed with the SEC.
The plans have a combined $3.56 billion in assets, and the company's pension liabilities exceeded assets by $1.54 billion as of July 3.
Kathleen Gilgunn, spokeswoman, would not say how many pension plans the company has; according to Money Market Directory, Sara Lee has a defined benefit plan, two 401(k) plans and an ESOP.
The plans had a net actuarial loss of $1.34 billion at the end of fiscal 2004, compared with a net actuarial loss of $1.62 billion at the end of fiscal 2003.
U.S. institutional investors spent $11.29 billion on equity trading commissions in the 12 months ended Jan. 31, down 11% from $12.65 billion in the prior 12-month period, according to new research from Greenwich Associates.
The average institution spent $27 million on commissions in 2003, down from $29 million, according to the report.
Greenwich also reported that institutional investors allocated a combined 18% of their total commissions to soft-dollar transactions and commission recapture programs in 2002 and 2003, but the rate is expected to drop to 11% over the next 12 months.
U.S. equities are looking less attractive to macro hedge fund managers, according to new data from Van Hedge Advisors International.
Exactly half of the managers surveyed by Van Hedge said they are bearish about U.S. stocks for September, compared with 26% in August and 36% in July.
Only 21% of managers are bullish for September U.S. stock returns, compared to 39% in August and 36% in July; 29% are neutral about September returns.
Macro fund managers are more optimistic about U.S. 10-year Treasury notes in September, with 50% feeling bullish, 12% neutral and 38% bearish.
In August, half of macro fund managers were bearish on 10-year T-bonds, with the remaining 50% split evenly between those neutral and bearish.
Russell Investment Group acquired Towers Perrin's Australian pension consulting and employee benefits business. Terms were not disclosed, said Steve Claiborne, Russell spokesman.
Russell will take on 270 Towers Perrin employees, increasing Russell's Australian presence to about 340 people. Towers' former HR Services will be renamed Russell Employee Benefits.
Also, the two asset consulting practices will be integrated, creating Australia's largest asset consulting practice.
Russell and Towers Perrin (Australia) had been sharing investment research resources and jointly servicing many of Australia's leading pension funds for the past three years.
Alan Schoenheimer will continue as managing director of Russell's overall Australasian business, while David Solomon, managing director of Towers' HR Services business in Australia, will become managing director of Russell Employee Benefits.
Prudential Retirement added equity managers Waddell & Reed, Goldman Sachs Asset Management and Cooke & Bieler to its manager-of-managers program for 401(k) plan sponsors. Waddell & Reed will run large-cap growth; Goldman Sachs, midcap growth; and Cooke & Bieler, midcap value.
Whitworth to lead system
Owen Whitworth was appointed chairman of the $20 billion Texas Employees Retirement System, Austin, said Mary Jane Wardlow, spokeswoman. He replaces Milton Hixson, whose term expired at the end of August. Mr. Whitworth was vice chairman; he will be replaced by board member Carolyn Gallagher.
Kuhlman Electric Corp. hired Fidelity as bundled provider of its three 401(k) plans, which have a combined $14 million in assets, said Tom Minnich, vice president of finance and CFO. The change will take effect Jan. 1. Mr. Minnich said current provider Mellon Financial was invited to rebid. The search was conducted internally; no consultant was used.
The plans, which mirror each other, offer seven investment options each.
John B. Cunningham, a managing director at J.&W. Seligman, was named head of the firm's core investment team and portfolio manager for Tri-Continental Corp., a closed-end investment company managed by J.&W. Seligman.