Compliance September 14, 2010

PBGC to Take St. Vincent’s Plan

September 14, 2010 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation (PBGC) is moving to assume responsibility for the pension plan covering more than 9,500 workers and retirees of St. Vincent Catholic Medical Centers (SVCMC).
Reported by

The agency said it is stepping in because the underfunded retirement plan will be unable to make benefit payments and be abandoned after SVCMC’s assets are liquidated, its activities cease, and there is no one left to administer the plan. No asset buyer has agreed to assume responsibility for the plan.  

Shortly after filing for bankruptcy on April 14, 2010, the hospital and health care system based in New York City’s Greenwich Village received New York State Department of Health approval of its plan to close the hospital. By the end of May, all patients had been discharged or transferred to other facilities and debtors began selling off SVCMC’s assets and ongoing businesses.  

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A PBGC news release said the Saint Vincent Catholic Medical Centers Retirement Plan is 55% funded, with assets of $345 million to cover benefit liabilities of $622 million. The agency expects to cover about $267 million of the $277 million shortfall.  

Assumption of the plan’s unfunded liabilities will increase the PBGC’s claims by $266.9 million and was not previously included in the agency’s fiscal year 2009 financial statements.  

The agency said it will not have specific information about SVCMC pension benefits until it becomes trustee of the plan.
Investing September 14, 2010

ETF Inflows Halt in August

September 14, 2010 (PLANSPONSOR.com) - Exchange-traded funds posted net outflows totaling roughly $1.3 billion in August, ending a six-month streak of consecutive monthly inflows, according to Morningstar Direct’s Fund Flows Update.
Reported by

U.S. ETFs closed the month with about $812 billion in total net assets, down 2.3% month-over-month.  

For the second straight month, international-stock ETFs have led all asset classes in terms of net inflows, thanks to strong demand for emerging-markets funds, Morningstar said. International-stock ETFs posted $4.4 billion in net inflows. Over the trailing three-year period, emerging-markets ETFs have accounted for more than 61% of all flows into international-stock ETFs.  

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SPDR S&P 500 SPY, the largest and most heavily traded ETF on the market, saw nearly $6.6 billion head for the exits in August, pushing total year-to-date net outflows for the fund to $19.1 billion. The tech-heavy PowerShares QQQ Trust QQQQ was a distant second in terms of highest net redemptions, after shedding about $2.1 billion last month. The iShares Russell 2000 Index IWM claimed the third spot on the largest outflows list with more than $1.6 billion in net outflows.  

Morningstar data showed iShares iBoxx $ High Yield Corporate Bond HYG and SPDR Barclays Capital High Yield Bond JNK, with inflows of $464 million and $332 million, respectively, led flows into junk bond ETFs, as investors took on more risk in search of more attractive yields in August. Short-term bond ETFs remained popular despite their unimpressive yields.   

Precious-metals ETFs, bolstered by inflows of $827 million into SPDR Gold Shares GLD, were the most popular ETFs in the commodities asset class in August.   

The Morningstar report is at http://www.global.morningstar.com/augflows10.

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