At Deadline

The Financial Accounting Standards Board, as expected, issued a standard on Sept. 29 that could result in an estimated $140 billion in unfunded pension liabilities and $326 billion in unfunded retiree medical and other postretirement liabilities moving onto the corporate balance sheets of S&P 500 companies, said Howard Silverblatt, Standard & Poor's senior index analyst.

The new rule could result in a 6% to 7% average reduction in shareholder equities at the S&P 500 companies that offer these plans, Mr. Silverblatt said.

The new pension accounting standard requires liabilities of underfunded defined benefit and other postretirement plans — as well as assets of overfunded plans — to be moved to the balance sheet from financial statement notes. The rule takes effect Dec. 15.

Bob Collie, director-strategic advice, Russell Investment Group, said the new FASB standard will have little impact for most companies. But for a small number, "it will be radical" because they "cannot afford to have the balance-sheet uncertainty" of adding the liabilities.

Some affected pension plans "will be forced to make very big changes in how they invest. It will be liability-driven investment. Maybe it will be a big shift to fixed income (to an allocation) of 50%, 60% or more. Maybe it will be swaps."

NCR will stop making contributions to its $3 billion pension plan at the end of this year. The company will increase the matching contribution it makes to its $1 billion 401(k) plan to 5% of the participant's salary, from 3.75% of salary, starting Jan. 1, according to a news release. The move is expected to save about $40 million per year.

NCR froze its pension plan to new employees in September 2004 and increased the match to its 401(k) participants under the age of 40 to 3.75% of salary from 2.5%.

Anthony Krabill, senior investment manager at the company, did not return calls by press time seeking further information.

The $35.2 billion Los Angeles County Employees Retirement Association hired Goldman Sachs Asset Management and Principal Global Investors to manage $500 million each in domestic core-plus fixed income, said Juan M. Almaguer, principal investment officer, public markets. Funding will come from cash and reducing an $880 million Lehman Aggregate bond index fund managed by Barclays Global Investors.

The $1.7 billion Santa Barbara (Calif.) County Employees Retirement System is starting to look at managers for its first private equity allocation, said Oscar Peters, retirement administrator. The board added its first long-term private equity and real return/real allocations in January — 5% of assets for each asset class. Hamilton Lane, hired in July as a specialist private equity consultant, is assisting.

The plan has a small exposure to hedge fund Amaranth Advisors through a $30 million investment made in July as part of the real return allocation, Mr. Peters said. While the final amount of the loss will not be known for some time, it will not be very large, and the plan remains committed to hedge fund investment, he added.

The $6.5 billion Los Angeles Water and Power Employees' Retirement Plan board is considering allocating 1% of plan assets to hedge funds as part of its current 5% alternatives allocation. So far, the fund's only alternative investment is a $60 million private equity allocation. Fund officials are looking for one or more hedge fund-of-fund managers, said Sangeeta Bhatia, retirement plan manager. Performance Consulting Associates will provide a list of firms from which fund officials are expected to make a selection by year's end.

The board also selected Glass Lewis as its first proxy voting adviser.

A&O Services, Rijswijk, Netherlands, hired Merrill Lynch Investment Managers to run a swap overlay on nominal assets of €1.4 billion ($1.8 billion), Leen Meijaard, MLIM's managing director for the Benelux region, said in a telephone interview.

A&O, which manages about €3.2 billion in collective industrywide pension assets on behalf of Dutch painters, had decided to better match its assets with future liabilities by using a passive interest-rate swap strategy, Mr. Meijaard said.

The $14.2 billion Illinois State Universities Retirement System is considering whether to hire a private equity consultant, said Dan M. Slack, executive director. The idea was suggested by general consultant Ennis Knupp. The fund has 4.8% of assets allocated to private equity, Mr. Slack added. "SURS has traditionally had Adams Street Partners, Pantheon Ventures and, to a lesser extent, Muller & Monroe to fill that role, even though they are not consultants," he said.

Amy Chen was named director of investments at the Smithsonian Institution to oversee its $800 million endowment. Ms. Chen is a portfolio manager at the Doris Duke Charitable Foundation, where she managed $1.8 billion in assets.

Old Mutual Asset Management will acquire a majority stake in Ashfield Capital Partners, a growth equity shop with $3 billion in assets, said Scott Powers, Old Mutual CEO. Under an agreement announced Sept. 28, OMAM will acquire an initial 55% interest, with the option of gradually expanding its stake to 85%. Ashfield, with its established large-cap growth strategy and a strong small-cap growth strategy just coming up to its three-year track record, will help balance the value-heavy equity offerings of Old Mutual's money management boutiques, Mr. Powers said.

The $8.3 billion Teachers' Retirement System of Oklahoma will likely begin drafting a resolution this month asking the state Legislature to help the system become at least 85% funded by 2037, according to Tom Beavers, executive director.

The plan's actuary, Gabriel Roeder Smith, will present its actuarial valuation at the plan's Oct. 25 meeting. Officials of the system, which is currently 49.5% funded, will likely ask the state for $50 million annually over the next 30 years. System officials made similar recommendations in the past, but this would be the first time they've proposed a resolution, Mr. Beavers said.

The Legislature convenes Feb. 5.