In your March 4 issue, you were kind enough to include information about Harris Investment Management (People section, page 29). Unfortunately, an unwary reader might conclude from the story that our firm has experienced a drain in investment personnel. Our investment professional complement remains intact. Carla Eyre has been chief operating officer.
I will continue with the firm as chairman and chief strategist, and will remain involved with HIM's flagship equity mutual fund, which was ranked ninth out of 499 growth & income funds nationally for the year at the end of January, according to a Wall Street Journal survey.
Within the past month, HIM and its parent have considerably expanded our family of mutual funds, demonstrating the firm's commitment to the investment management business.
Bill Leszinske, who remains head of equity investment operations, is president and chief investment officer, responsible for implementing an aggressive strategy of building institutional assets under management.
Chairman and chief strategist
Harris Investment Management
James Lockhart's Mar. 4 letter responding to my Jan. 8 Others' View commentary avoids a direct comment on the criticisms I made. My purpose in replying to him is to call attention to the modus operandi of the Pension Benefit Guaranty Corp., whose way is not uncommon in Washington and serves to frustrate the public.
Mr. Lockhart makes no attempt to rebut my principal assertion that the $2.9 billion deficit arose from puffed-up numbers, used by him and his successor, Martin Slate, to generate public concern in order to gain support for PBGC's demand for legislation to increase PBGC's premiums, speed up plan funding, and give it additional powers over corporate sponsors. The PBGC's failure to rebut has a long history.
I first noted the questionable way PBGC calculated its deficit at the Society of Actuaries meeting in New York in October 1993. My co-panelist, a senior PBGC actuary, made no comment at all on my analysis, which puzzled me. When I repeated my findings a week later in New Orleans at the annual meeting of the Conference of Consulting Actuaries, the same actuary was in the audience and again remained silent.
Besides using the deficit as a bogeyman, Mr. Lockhart mentions two others employed by PBGC: the need to avoid a saving-and-loan type of crisis and the "risks of underfunded plans to participants." A Employee Benefit Research Institute analysis finds little basis for the PBGC's S&L analogy (EBRI Issue Brief, May 1992).
The PBGC exaggerates the risk of underfunded plans, possibly failing to grasp that an unfunded past service liability is an integral part of most defined benefit plans. Without past service benefits, which require a past service liability be set up and funded over many years, a company could not easily provide adequate benefits to its older long-service employees.
The PBGC would help build public confidence if it obtained for its advisory committee greater powers of oversight. It also could do much to improve the PBGC's annual reports; the awards it received could not have been based on the difficult-to-read and misleading technical sections.
The PBGC now needs to acknowledge that it has far more assets and income than required. One would hope it would seek to undo the Retirement Pension Act's premium increase and more restrictive funding rules. The sponsors of defined benefit plans deserve a respite from the onerous demands on their resources.
David Langer Co.