Aon freezes DB plan

Aon is freezing its defined benefit pension plan, ending contributions to a defined contribution plan it set up in 2004 and enhancing its 401(k) plan.

As of April 1, employees in Aon’s pension plan will stop earning benefits; the plan was closed to new employees in January 2004. Aon stopped making contributions on Jan. 1 to the DC plan, which covered those U.S. employees hired since Jan. 1, 2004.

Also on Jan. 1, Aon enhanced its 401(k) plan, now matching 100% of employees’ salary deferrals up to the first 6% of pay. It had been a 50% company match on the first 6% of pay.

An Aon spokesman said the changes were made to reduce costs and to base employees’ compensation more on performance.

The Aon defined benefit plan had $1.514 billion and the 401(k) plan had $1.914 billion, both as of Dec. 31, 2007, according to SEC filings.

United Parcel Service suspended its matching contribution to its 401(k) plan for management and other non-union employees, while Tenneco suspended its 401(k) company match.

UPS matched 100% of employees’ salary deferrals up to the first 3% of pay, said Donna Barrett, spokeswoman. UPS had $8.47 billion in DC assets as of Sept. 30.

Tenneco had matched 50% of employees’ salary deferrals, up to the first 8% of pay. Tenneco froze its defined benefit pension plan in 2007. The 401(k) plan had $392 million in assets and the DB plan had $249 million in assets as of Dec. 31, 2007.

SEC Chairman Mary L. Schapiro said in a speech Feb. 6 that the agency will form an advisory committee to help investors “feel that they have someone on their side — that they can go to the SEC to seek redress, or to have their opinions heard.”

The committee would “ensure that the commission hears first hand about the issues most concerning to investors,” she said.

CalPERS’ and CalSTRS’ investment activities continued Feb. 6 but at reduced levels because of a two-day-per-month furlough for state employees ordered by Gov. Arnold Schwarzenegger.

“Both we and CalPERS have about 20% of our investment staff in to manage the portfolios,” said Christopher J. Ailman, CalSTRS’ CIO.

The furlough was imposed by Mr. Schwarzenegger to save money during a budget stalemate in the state Legislature. The furlough is expected save the state an estimated $1.3 billion over the next 18 months.

Russ Kamp, CEO of Invesco Quantitative Strategies, left the firm as part of a reorganization that moved that business and another quantitative operation, Invesco Multiple Asset Strategies, under unified leadership.

The combined quantitative business will be called Invesco Global Strategies and will be led by Kirk Holland, CEO of Invesco’s global asset management group, who oversaw the multiple asset strategies team.

Bernhard Langer, who was CIO of Invesco Quantitative Strategies in Frankfurt, was named to the new post of CIO, quantitative equity strategies. Scott Wolle was named to the new post of CIO, global asset allocation.

The $7 billion Oklahoma Teachers’ Retirement System placed active domestic large-cap growth equity manager Goldman Sachs Asset Management “on notice” because of performance and personnel issues and Aletheia Research and Management “on notice” because of personnel issues, according to James R. Wilbanks, executive secretary.

The system’s “on notice” status requires a 90-day review period that can result in termination, Mr. Wilbanks said. “On alert” triggers a six-month review before a manager is moved to “on notice” or cleared from watch.

Goldman Sachs, which runs $267 million, was put on alert in March for personnel departures and performance, Mr. Wilbanks said, adding personnel changes automatically put a firm on alert.

Aletheia, which runs $185 million, has been on alert since November because of staff departures. “We are putting them on notice specifically for personnel, but we are looking at performance as well,” he said. Representatives at Goldman Sachs and Aletheia declined to comment.

Single-employer pension plans unable to meet benefit payments because of losses tied to the alleged Ponzi scheme run by Bernard L. Madoff Investment Securities need to notify the PBGC “within 30 days of knowing or having reason to know that this reportable event has occurred,” according to a Feb. 6 news release from the agency.

McClatchy Co. and the St. Petersburg Times will freeze their defined benefit plans to new employees and suspend matching contributions to their 401(k) plans.

McClatchy, whose actions are effective March 31, is developing a new DC plan to tie employer contributions partly to cash flow, said spokesman Peter Tira. He said details hadn’t been determined.

McClatchy has two DB plans, the $1.4 billion Master Trust Plan and the $850 million Knight Ridder Investments Savings Plan, according to Money Market Directories. Its two DC plans are the $315 million McClatchy Newspaper Deferred Compensation and Investment Plan and the $181 million Star-Tribune Master Savings Plan, also according to MMD.

The St. Petersburg Times will freeze its $110 million defined benefit plan and suspend its company contribution to its $214 million 401(k) plan effective April 1, in response to the deepening recession, said spokesman Andrew Corty.

Emerson Electric is considering increasing its 2009 pension contribution to about $300 million from $200 million, subject to review later this year, according to an SEC filing.

Emerson reported a $1 billion funding deficit as of Dec. 31, according to the filing. Emerson’s pension plan was valued at $2.2 billion as of May 2007, the most recent data available in MMD.

Underfunding of Ford Motor’s major U.S. pension plans totaled $4.1 billion in 2008, the firm’s fourth quarter earnings report shows.

In 2007, those plans were $3 billion overfunded. The 2008 drop is due to lower investment returns, which were -10.1%, compared with 11.3% in 2007, according to the earnings statement.

Ford’s U.S. pension plans had a combined $35.9 billion in assets as of Sept. 30.

The $11.7 billion New Mexico State Investment Council would have more members appointed by the state Legislature and a majority of the council chosen with the advice and consent of the state Senate under a new bill.

Under the bill sponsored by New Mexico state Sen. Steven Neville, Gov Bill Richardson would continue to chair the Santa Fe-based council, which would still include state Treasurer James Lewis. However, the council’s membership would increase to 13 from nine, and the three gubernatorial appointments would be replaced by eight members, of which four would be appointed by legislators.