At Deadline

The U.S. Department of Energy will stop reimbursing expenses for defined benefit coverage for new contractor employees, according to a new policy announced April 27.

The department "will reimburse contractors for the costs of their market-based defined contribution pension plans (similar to 401(k) plans) and market-based medical benefit plans," the department said in a statement. "The new policy will improve the predictability of contractor benefit costs and mitigate the growth of the department's long-term liabilities for these costs."

The department will continue to reimburse contractors for pension costs for current and retired employees.

Watson Wyatt criticized the new policy, saying it will undermine the ability of government contractors to provide guaranteed retirement benefits. "For decades, public policy has supported the notion that the best way to ensure Americans' retirement security is through guaranteed pensions," Sylvester J. Schieber, director of U.S. benefits consulting at Watson Wyatt, said in a statement. "We find it curious that a government agency is threatening the retirement security of workers outside their department. Meanwhile, U.S. government workers themselves retain a rich, secure pension plan."

Megan Barnett, department spokeswoman, didn't return a call seeking further information.

The PBGC has taken over three underfunded pension plans of Aloha Airlines. The three are 55% funded, with $190 million in assets and $345 million in liabilities, according to PBGC estimates. The agency expects to be responsible for $117 million of the $155 million shortfall. Aloha filed for Chapter 11 bankruptcy protection Dec. 30, 2004.

Aloha spokesman Stu Glauberman did not return a call seeking comment by press time.

Julian Regan, executive director of the $7.7 billion New York State Deferred Compensation Board, left to become vice president of risk oversight at Fidelity Institutional Retirement Services, a new position. Reached at Fidelity, Mr. Regan declined to discuss his new position. Edward Lilly, deputy executive director of the board, will assume Mr. Regan's responsibilities until a new director is hired.

Pioneer Investments acquired Vanderbilt Capital Advisors, which manages fixed income and structured finance strategies. Details of the deal, which makes the formerly employee-owned firm a wholly owned subsidiary of Pioneer Investment Management USA, were not disclosed. In a news release, Pioneer called Vanderbilt, which has roughly $13 billion in assets under management, "one of the leaders in the marketplace for collateralized debt obligations."

Emad A. Zikry will remain president of Vanderbilt, reporting to Osbert M. Hood, Pioneer's president and CEO.

Hamilton Lane's Brun retires

Leslie Brun, founder and chairman emeritus of Hamilton Lane, retired on April 28. Mr. Brun had been steadily decreasing his equity interests in the private equity gatekeeper.

Michael Mulhern was hired as executive director of the $1.8 billion MBTA Retirement Fund, confirmed Stephen Crawford, spokesman. He replaces Karl White, who will be leaving "to pursue new opportunities," Mr. Crawford said. Mr. White was not available to comment. Mr. Mulhern retired as general manager of the Boston-based Massachusetts Bay Transportation Authority last year.

The $13.8 billion New Mexico Investment Council committed €30 million ($37.8 million) to the Fourth Cinven Fund, $30 million to Catterton VI, $20 million to VSS Communications Partners IV, $30 million to VMG Equity Partners and $15 million to Paladin Private Equity Partners, said Charles Wollmann, spokesman.

Separately, officials will evaluate the council's $1 billion hedge fund portfolio in about 18 months and decide if they should consolidate or add managers. Currently, 7% of total assets are in hedge funds. The target is 10%.

The $2 billion Houston Municipal Employees Pension System will invest $10 million in Highland Capital Management's Crusader Fund, a distressed fixed-income hedge fund. Funding will come from cash. Wilshire Associates assisted.

Russell plans 2 new indexes

Russell Investment Group plans to launch two new indexes — microcap value and microcap growth — at the end of June, a year after its broader microcap index began.

"Our research confirms there is a real need for truly representative style benchmarks for microcap managers," Steve Swartley, senior manager research analyst, said in a news release.

Moody's Investors Service has created new ways to calculate pension assets and liabilities for companies that pre-fund their pension plans, like in the U.S., and those that use pay-as-you-go pension systems, like in Europe, to allow for better comparison of financial statements.

For pre-funded plans, Moody's adjusts the balance sheet to record the unfunded pension obligation, removing smoothing from the income statement and capturing pension contributions above the service cost as repayment of pension debt in the cash flow statement. It also considers the discount rate assumptions used for calculating the present value of future payments and assumed returns on pension assets.

For pay-as-you-go plans, Moody's adjusts the balance sheet to record an equity credit. It adjusts the income statement for the reduction in interest expense associated with a lower pension obligation and keeps the cash flow statement unchanged.

The $23 billion Connecticut Retirement Plans and Trust Funds will withhold votes for re-election of compensation committee members of boards of directors at Pfizer, AT&T, Wal-Mart, Home Depot, Merck, Time Warner, Verizon, Safeway and BellSouth, state Treasurer Denise L. Nappier announced. "Executive compensation that is inconsistent with a company's performance severely threatens the credibility of leadership at a company and has the potential to damage shareholder and public trust in that company," Ms. Nappier said in a statement. "And that can adversely affect the value of our shares."