The SEC adopted a rule that will let mutual fund companies impose a redemption fee, on a fund-by-fund basis, on investors that conduct rapid-fire trades. The rule would also enable mutual fund companies to obtain tax identification information from intermediaries about investors that violate market-timing policies and conduct rapid-fire trades. The SEC also asked for additional comments about whether the agency should adopt uniform parameters for a redemption fee.
California Gov. Arnold Schwarzenegger said because of legislative inaction, he will seek a special election on whether new California state employees should be required to join a defined contribution plan, freezing entrance to existing defined benefit plans as of July 1, 2007.
Two months after he called for public pension and other statewide reforms, the governor said in a press briefing that state legislators had not offered any counter-proposals, committee hearings or negotiations. Mr. Schwarzenegger said he will start collecting 600,000 voter signatures to put each proposal on a special state ballot.
In a press briefing, state Treasurer Phil Angelides said: "Today is a sad day for California because the governor has chosen to pick … fights with the teachers, firefighters and police officers who serve our communities." He said the pension reform proposal would slash benefits for future teachers in half.
Darlene DeRemer was hired as a partner of Grail Partners, the boutique investment bank focused on the money management industry that Donald H. Putnam launched last month. She was a managing director at Putnam Lovell NBF Group, the investment bank that Mr. Putnam co-founded in 1987. NBF terminated Mr. Putnam last month, citing "irreconcilable differences." A Putnam Lovell spokesman, who asked not to be identified, confirmed the departure.
The IRS subpoenaed all financial records from the $16 million East St. Louis (Ill.) Police Pension Fund since 2001, said Dennis J. Orsey, attorney for the pension board.
He said the board is cooperating with the IRS. Mr. Orsey said the IRS did not say why it sought the information; Sue Hales, IRS spokeswoman, said federal privacy laws prohibit the agency from discussing any particular taxpayer.
Dorene Hoosman, city clerk and a member of the police pension board, referred questions to Mr. Orsey.
Harvard Management hired PrinceGoldsmith to assist in its search for a successor to Jack R. Meyer, outgoing president and CEO, according to an e-mail from Lucie McNeil, senior director of communications. Harvard Management manages $22.1 billion.
Joseph Goldsmith and Marilyn Prince are leading the effort. Names of potential candidates can be e-mailed to [email protected] or [email protected] Names also can be sent to the steering committee chaired by James Rothenberg, Harvard treasurer, at [email protected] No further details will be given about the search until a new CEO is appointed, Ms. McNeil said.
Mr. Meyer announced Jan. 11 that he will leave Harvard this summer to form a private investment firm.
Three more corporations announced, in their annual reports, how much they will be contributing to their pension plans:
Georgia-Pacific expects to make cash contributions of $193 million to its $3.7 billion defined benefit plan in 2005. The company contributed $207 million in cash to the plans during the fiscal year ended Jan. 1 and posted pension expense of $177 million during the fiscal year. Georgia-Pacific officials expect pension expense of $161 million in 2005, "primarily as a result of the favorable investment returns on plan assets in 2004," according to the firm's annual report.
American Electric Power expects to make discretionary contributions of $100 million per quarter to its two pension plans in 2005 in order to fully fund them by year's end. The company also contributed $200 million to the plans in the fourth quarter of 2004.
AEP's pension plans, which have combined assets of roughly $3.6 billion, were underfunded by about $450 million as of Dec. 31.
KeySpan expects to contribute about $82 million to its $2 billion pension plan in 2005. The plan was underfunded by $491.2 million as of Dec. 31. KeySpan contributed roughly $140 million to the plan in 2004, said George Laskaris, director of investor relations.
The $1.7 billion Seattle City Employees' Retirement System will commit $15 million to Carlyle Partners IV and $15 million to Lehman Brothers Real Estate Mezzanine Partners, said Mel Robertson, CIO. Funding will come from money parked in an S&P 500 index fund and an EAFE index fund, both managed by Barclays Global Investors.
William G. Clark, deputy director, will replace Peter A. Langerman as director of the New Jersey Division of Investment effective March 12, said Orin Kramer, chairman of the state's Investment Council. Mr. Langerman announced his resignation in January. The division oversees the state's $67.1 billion pension fund.
Evergreen Pacific Partners, a buyout firm, closed its first fund at $275 million. Investors include WestAM, the $43 billion Pennsylvania Public School Employees' Retirement System and the $2.3 billion Duke Endowment.
Sponsors of British corporate pension plans are diverting cash to shore up their pension schemes at the expense of company profits and capital investment, according to a survey of 60 U.K.-based firms with an average £100 million ($191 million) in pension assets. The survey by SEI Investments also found 86% of companies would adjust or consider adjusting their investment strategy, and 82% would increase pension contributions.
Corporate pension plans produced an average return of 11.7% in 2004, while public plans and foundations/endowments returned 12.5% and 12.2%, respectively, according to a survey by Mercer Investment Consulting.
The median return for corporate plans was 8.1% in the fourth quarter, while public pension funds returned 8.4% and foundations/endowments returned 8.2%.
The median fixed-income manager outperformed the Lehman Brothers Aggregate Bond index by 50 basis points in 2004, according to the survey. The median large-cap equity manager outperformed the S&P 500 index by 110 basis points in 2004.
The survey also found that the average duration of a pension fund's bond portfolio was 4.3 years, while the average span of liabilities is 12 years.