Benefits August 23, 2007

CalPERS Says Computer Error Compromised Retirees' Social Security Numbers

August 23, 2007 (PLANSPONSOR.com) - Two pension fund security breaches could compromise the personal information of New York and California retirees, the Associated Press reported.
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According to the news report, the California Public Employees’ Retirement System (CalPERS) security breach happened when pension fund brochures containing part or entire Social Security numbers on the envelope were mailed out to 445,000 retired workers.

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CalPERS blamed a computer error for the mailing.

Also, a laptop with the financial information of as many as 280,000 New York City retirees disappeared from a restaurant. The computer was reported stolen on Monday by the Financial Information Services Agency consultant who brought the information into the restaurant.

Data thefts and other breaches in security have prompted worries that the personal information about retirees and other types of employees might not be as safe as once thought.

Mercer Human Resource Consulting raised eyebrows when the personal information of more than 6,000 employees at DCH Health System were lost in March. The confidential information included an encrypted disk and hard-copy documents containing Social Security numbers and personal information (See Mercer Loses Personal Information on 6,000 DCH Health System Employees).

In May 2006, a computer was stolen from the home of Department of Veterans Affairs employee. The computer had the personal information of 26.5 million people (See Veterans Affairs Bars Employee-owned Computers and Restricts Offsite Network ).

Products August 22, 2007

Vanguard to Take over Long/Short Fund

August 22, 2007 (PLANSPONSOR.com) - The Vanguard Group has announced a proposal with Charles Schwab Investment Management to reorganize the Laudus Rosenberg U.S. Large/Mid Capitalization Long/Short Equity Fund into a new Vanguard offering.
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A Vanguard news release said the company expects the new Market Neutral Fund to appeal primarily to institutional investors, particularly endowments and foundations. The fund will require minimum initial investments of $250,000 for Investor Shares and $5 million for Institutional Shares.The two share classes will feature estimated expense ratios of 0.75% and 0.60%, respectively.

The $21-million open-end fund, which is a member of Schwab’s Laudus family of funds, is sub-advised by AXA Rosenberg Investment Management LLC, according to the release. Vanguard Quantitative Equity Group would also manage a portion of the fund.

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Laudus Rosenberg Fund shareholders are expected to be mailed a proxy statement detailing the terms of the proposed reorganization in early October. If approved at a special shareholder meeting scheduled for mid-November, the tax-free reorganization is expected to be completed by year-end 2007, according to Vanguard.

Along with the reorganization proposal, Vanguard has filed a registration statement with the U.S. Securities and Exchange Commission (SEC) for the new Vanguard Market Neutral Fund. The new no-load fund will seek to provide long-term capital appreciation while limiting exposure to general stock market risk by using a long/short market-neutral strategy.  

The new fund will assess a 1% fee on shares redeemed within one year of purchase, which is half the current charge on shares redeemed within 30 days of purchase, Vanguard said.

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