N.Y. State shifts $1.3 billion into hedge funds

The $116.5 billion New York State Common Retirement Fund will have redeployed, by year's end, about $1.3 billion into direct hedge fund investments from the redemption of its hedge fund-of-funds investments, said Robert Whalen, a spokesman.

The move is part of the overhaul of the fund's hedge fund portfolio, which has a target allocation of 5% of total assets. The system's staff aims to eventually invest about 80% of the portfolio directly in single and multistrategy hedge funds and about 20% in specialty funds of funds.

Prior to 2009, as much as 89% of the hedge fund portfolio was invested in funds of funds.

Royal Dutch Shell will make a total of $5 billion in pension contributions in 2009, the company said in its third-quarter earnings announcement. The company already has paid $4.2 billion to the plans.

Earlier this year, Shell had announced it would contribute $6 billion to $8 billion to its plans. The typical annual contribution by the company is $1 billion to $2 billion, according to Shell.

ING Group is leaning toward doing an IPO of its investment management business, according to industry sources.

The Dutch insurer on Oct. 26 announced that it is splitting up its banking and insurance operations, which includes its money management business. The firm said it was looking at IPOs, divestitures or a combination of the two.

A report in InvestmentNews, a sister publication of Pensions & Investments, said ING is actively discussing an IPO for its €400 billion ($596 billion) money management division “to get capital quickly,” according to one investment banker, who requested not to be named.

Separately, Jeff Becker was named CEO of ING Investment Management, Americas, effective Jan. 1. He replaces Rob Leary, who was named CEO of ING Insurance U.S. Mr. Becker was vice chairman, chief operating officer, and head of business management and strategy. A replacement has not yet been named, Mr. Ripley said.

The SEC plans to allow shareholder proposals seeking more disclosure about CEO succession planning policies and on the financial risk companies face from social, health and environmental issues, according to an SEC staff legal bulletin.

Previously, the SEC had excluded CEO succession planning as ordinary business matters, but the bulletin said the agency now believes it “transcends the day-to-day business matter of managing the work force.” Similarly, financial risks posed by social, health and environmental issues may “raise policy issues so significant that it would be appropriate for a shareholder vote,” the bulletin states.

Corporate boards will face “a whole new level of risk” and “a sea change in how directors will view CEO succession planning” as a result of the bulletin, according to a statement from executive recruiter Heidrick & Struggles International.

Mindy Lubber, president of Ceres, praised the SEC staff decision. “Issues like climate risk and other sustainability risk are profoundly important to shareholders concerned about the value of their stock.” Ceres is a coalition of institutional investors and environmental groups.

U.S. retirement assets totaled $14.4 trillion as of June 30, up 7.4% from three months earlier, as pension contributions and market appreciation helped stem the declines of the first quarter, according to Investment Company Institute data.

Assets in corporate defined benefit pension plans totaled $2 trillion as of June 30, up 11% from three months earlier, while assets in all defined contribution plans were $3.6 trillion, including $2.5 trillion in 401(k) plans. Total DC assets were up 6.8% from March 31, according to the report.

State and local pension plans had a combined $2.5 trillion, up 8.7%, while assets in federal retirement plans and annuities were $1.2 trillion and $1.4 trillion, respectively, both unchanged from the end of the previous quarter.

Lifecycle and target-date mutual funds had $194 billion in assets at the end of the second quarter, up 22% from three months earlier.

The ICI report estimated total assets of $3.7 trillion in IRAs as of June 30, up 8.8% from the end of the previous quarter.

Nearly half of U.S. workers who left their jobs last year took cash distributions from their 401(k) plans, according to a Hewitt Associates study.

Hewitt's analysis of 170,000 401(k) plan participants who left jobs during 2008 found 46% cashed out their 401(k) accounts, while 25% rolled them over to a qualified IRA or other retirement account, and 29% kept their savings in their prior employer's DC plan.

Younger workers were more likely to take cash distributions than older workers, Hewitt's study found. Sixty percent of employees in their 20s who left jobs last year cashed out their 401(k)s, compared with 34% of workers in their 50s.

Fewer of those with larger 401(k) balances cashed out, compared to those with smaller balances.

Ed Nijpels, chairman of the €180 billion ($265 billion) Stichting Pensioenfonds ABP, offered to resign barely three months into the job if a Dutch government probe of DSB Bank, where he had served on a supervisory board, affects his ability to lead ABP.

DSB Bank, which declared bankruptcy earlier this month following a run on deposits, is under investigation for the circumstances leading to the bank's collapse. Some ABP participants have since questioned Mr. Nijpels' ability to serve as chairman.

According to a letter posted on ABP's website, Mr. Nijpels said he understands the concerns that ABP participants have about his previous ties to the bank. If “the facts from the investigation” at any point hinder his ability to serve as chairman of ABP, then he will resign, according to the letter.

About three in four CFA Institute members surveyed think an oversight authority for systemic risk in the market should have limited authority until causes for market failures are better understood, while 26% believe the authority should have immediate enforcement powers.

Among other findings of the survey, conducted by the CFA Institute Centre for Financial Market Integrity, 57% support a proposal for a systemic risk oversight board, 26% support the Federal Reserve Board in that role, 7% support a “college of regulators” approach and 10% support some other oversight mechanism.

The survey, e-mailed to 24,975 CFA Institute members Sept. 29, drew responses from 755 members.

Interest in private equity investments among endowments worldwide is mixed, according to a Preqin survey, with 32% planning to increase their exposure over the next three to five years and 14% planning to reduce it.

The survey of 100 endowments showed that 27% are above their target allocations to private equity, while 42% of endowments with assets of more than $750 million are overweight the asset class.

Sixty-five percent already have or plan to make new commitments to private equity in 2009 or 2010, and 35% will not make new commitments until 2011.