Deals and People November 16, 2005

CalPERS Names Interim CIO

November 16, 2005 (PLANSPONSOR.com) - The California Public Employees' Retirement System (CalPERS) on Wednesday tapped Anne Stausboll as Interim Chief Investment Officer (CIO).
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The move follows the recently announced resignation of current CIO Mark Anson who will step down in January to become chief executive officer of Hermes (See CalPERS CIO to Take Top Spot at UK Money Manager ). A CalPERS news release said that the giant public pension fund had also kicked off a global search for Anson’s replacement and had hired an executive recruitment firm to help in the process.

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“It is important that we find the best person for this job that will continue to build on CalPERS success in prudent, innovative and cost effective investment management,” said Rob Feckner, President of CalPERS Board of Administration, in the news release. “This will be a broad search that will be open to all qualified candidates, including our own excellent professional internal investment staff.”

Stausboll is currently the assistant executive officer of CalPERS Investment Operations. She formerly served in the CalPERS legal office for six years, including two years as deputy general counsel. She left in 1999 to become general counsel for California State Treasurer Phil Angelides. She returned to CalPERS in 2004 to help lead CalPERS investment operations.

According to the announcement, CalPERS expects to name a new CIO in the next six to eight months.

CalPERS is the nation’s largest public pension fund with assets totaling more than $196 billion. The system provides retirement and health benefits to more than 1.4 million state, school and local public agency employees.

Compliance November 15, 2005

PBGC Financial Status Still Dire

November 15, 2005 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation's (PBGC) insurance program for private sector pension plans sponsored by a single employer showed a deficit of $22.8 billion as of September 30, 2005.
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In a press release on its annual Performance and Accountability Report, the PBGC said, as of September 30, the single employer program reported assets of $56.5 billion and liabilities of $79.2 billion.   Accounting standards also required the PBGC to disclose the change in net position that would have occurred as a result of subsequent events.   If events subsequent to the fiscal year had occurred prior to year end, the deficit in the single-employer program would have been $25.7 billion.

The insurance program’s finances were helped by $3.9 billion in investment income and a $2.3 billion reduction in liabilities due to higher interest rates, leading to an overall net gain of $529 million.   However, for the fiscal year, the PBGC incurred $4 billion in losses from completed and probable pension plan terminations while collecting only $1.5 billion in premiums.   The single-employer program took in 120 terminated pension plans with a total of $10.5 billion in assets and $21.2 billion in liabilities, for an average funded ratio of 50% , according to the news release.

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The PBGC assumed responsibility for the pension benefits of an additional 235,000 workers and retirees in 2005, bringing the total number owed a benefit to 1.3 million. The amount of benefits paid increased from $3 billion in 2004 to $3.7 billion in 2005 and is projected to rise to $4.4 billion in 2006.

The 2005 financial statements show PBGC’s reasonably possible exposure, an estimate of the amount of unfunded vested benefits in pension plans sponsored by companies at greater risk of default, reaching a record $108 billion, up from $96 billion in 2004 and $82 billion in 2003. The PBGC’s estimate of the total shortfall in insured single-employer plans remained in excess of $450 billion.

The PBGC’s separate insurance program for multiemployer pension plans posted a net loss of $99 million in fiscal year 2005, resulting in a fiscal year-end deficit of $335 million compared to $236 million for 2004.  

The multiemployer program covers 9.9 million participants in nearly 1,600 plans. The PBGC’s estimate of total pension underfunding in the multiemployer system exceeded $150 billion in 2004 and exceeds $200billion in 2005.   Additionally, the PBGC reported that the program faces $418 million in reasonably possible exposure to pension plans that may require financial assistance in the future, up from $108 million in 2004.

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