Wal-Mart 401(k) suit back on

A U.S. appeals court on Nov. 25 overturned a ruling that had thrown out a class-action lawsuit claiming Wal-Mart Stores charged excessive fees for management of its $10 billion 401(k) plan.

The decision by the 8th U.S. Circuit Court of Appeals overturns a decision by U.S. District Court Judge Gary Fenner dismissing the case.

Neither Wal-Mart officials nor Wal-Mart employee Jeremy Braden, who filed the original lawsuit, could be reached for comment. Mr. Braden had alleged that Wal-Mart had used retail mutual funds that carried higher fees than institutional vehicles, and that mutual fund companies kicked back fees to trustee Merrill Lynch in exchange for their funds being used in the plan. He argued that plan fiduciaries had violated their duty of loyalty to plan participants for failing to disclose complete information about the funds and how they were selected.

The appellate court ruled the burden should lie with Wal-Mart to show that the payments were “reasonable,” and thus reinstated the lawsuit.

James Hacking, administrator of the $6.1 billion Arizona Public Safety Personnel Retirement System, will step down on Aug. 31, 2010, he said in an interview.

He will leave the plan at the end of his five-year contract with the system, he said. A search for his replacement will begin in January.

Mr. Hacking, 64, said he has no immediate plans to retire but will move to St. Paul, Minn., where his wife, Laurie Hacking, serves as executive director of the $13.8 billion Minnesota Teachers Retirement Association.

Ronald E. Logue, State Street's outgoing CEO, will be get a $6 million “transition award,” payable in deferred cash, upon completion of a term as non-executive chairman of the board of directors from March 1, 2010, through Jan. 1, 2011, according to an SEC filing.

The company announced last month that Mr. Logue will serve as CEO until March 1, when he will be replaced by State Street President and COO Joseph L. Hooley.

Three companies announced plans to contribute a total of $1.24 billion to their pension funds:

• Emerson Electric contributed $303 million to its pension plans worldwide in 2009, according to a company financial statement. The company contributed $228 million to its U.S. plans and $75 million to its non-U.S. plans. The U.S. plans were valued at a combined $3.2 billion as of Sept. 30, up 6.7% from a year earlier. Non-U.S. plans were valued at a combined $690 million as of Sept. 30, up 11.5% from a year earlier.

• Deere expects to voluntarily contribute about $150 million to its core U.S. defined benefit plans in 2010, confirmed spokesman Ken Golden. The plans had $7.8 billion in assets and $7.1 billion in liabilities as of Oct. 31, 2008, according to the company's most recent annual report.

• Rockwell Collins contributed $98 million to its U.S. defined benefit plan as part of a combined $789 million in contributions it plans to make over the next five years, according to the company's 10-K filing. The company expects to contribute $76 million in the fiscal year ending Sept. 30, 2011, $213 million in fiscal year 2012, $225 million in fiscal year 2013 and $177 million in fiscal year 2014 to meet minimum statutory funding requirements, the filing said. The company had $1.9 billion in defined benefit assets and $2.9 billion in liabilities as of Sept. 30.

The $10.4 billion New Mexico Public Employees Retirement Association hired active EAFE value equity managers MFS Investment Management to run at least $125 million and KBC Asset Management to manage $40 million, said Joelle Mevi, deputy director of investments.

Funding will come from a $300 million EAFE equity portfolio that had been managed by AllianceBernstein, which was terminated earlier this year for performance. The assets are now in an index fund managed by Northern Trust.

The fund also made hedge fund commitments of $25 million to Eton Park Capital Management and $20 million to Brevan Howard Asset Management, said Ms. Mevi.

The $10.3 billion Ohio Police & Fire Pension Fund placed INTECH on watch for performance of a $690 million active domestic large-cap core equity portfolio, confirmed spokesman Dave Graham.

Fund officials will review the manager's status quarterly, Mr. Graham said.

Staff made the recommendation to put INTECH on watch; no consultant assisted.

Maxine Bergstein, spokeswoman at INTECH, did not return a phone call by press time seeking comment.

Education, wealth and plan characteristics — not race and ethnicity — are essential in identifying and overcoming low 401(k) plan participation and contribution rates of blacks and Hispanics, according to a new study by the Center for Retirement Research at Boston College.

“So, the best way to boost retirement saving among minorities is not by thinking about race or ethnicity, but by focusing plan design and education efforts on those with lower levels of earnings and education,” concludes the 11-page study, “401(k) Plans and Race.”

The authors of the study are Alicia H. Munnell, CRR director and the Peter F. Drucker professor of management sciences at Boston College's Carroll School of Management, and Christopher Sullivan, CRR research associate.

QSuper committed US$100 million to the QIC Global Fixed Interest Alpha Fund, according to a QIC news release.

There is still a strong belief in alpha streams proven to be uncorrelated to beta and added value regardless of market direction, Brad Holzberger, chief investment officer of the A$26 billion (US$24 billion) fund, said in the news release.

QIC has A$65 billion in assets under management.

Spokesmen for QIC and QSuper could not be reached for comment.

Double-digit median investment returns were reported in the third quarter by corporate and public pension funds, foundations and endowments, according to a Mercer report.

The median corporate plan gained 12.1% in the quarter; public plan, 11.7%; and foundations and endowments, 10.4%.

For the year ended Sept. 30, corporate plans returned a median 2.1%; public plans, 1%; and foundations and endowments, -1.5%. All three plan types have averaged between 4.6% and 4.8% for 10 years as of Sept. 30 on an annualized basis.

The number of institutional investors worldwide using ETFs grew 12% in 2008 to 2,926, according to a report from BGI's London-based ETF research and implementation strategy team.

That total brings the compounded annual growth rate in the number of institutional ETF users over the past 11 years to 29.9%, BGI said in a news release on the report.

Seventy-four percent of institutional ETF users manage assets for private clients and institutions, while another 15% are hedge funds.