Benefits February 19, 2004

Denver Eyes Pension Benefits Calculation Change

February 19, 2004 (PLANSPONSOR.com) - Those coming to work for the city of Denver after this summer would be in line for small pensions if officials approve a change that would cut the amount due to employees upon retirement.
Reported by

Currently, the retirement payment is calculated based on the employee’s highest pay rate for 36 consecutive months, the employee’s number of years working for the city and a “multiplier” of 2%. Administrators of the Denver Employees Retirement Plan on Wednesday recommended reducing the multiplier to 1.5%, the Denver Post reported.

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City officials say they need the pension formula change because, like pensions across the country, the plan suffered from falling investments returns in 2001 and 2002.

Don Cole, assistant Plan executive director, recommended the change for workers hired on or after July 1, 2004. Cole estimated that at the end of 2003, the plan had 97.9% of the assets needed to pay retirement benefits – a shortfall of about $34 million.

City Councilwoman Jeanne Faatz wants the city to also consider capping or eliminating the amount of accrued vacation and sick-leave time that can be added to the employee’s final salary. Currently, city workers can amass up to 896 hours of unused vacation and sick-leave time, which is then added to the worker’s pay to determine the pension payment.

Based on 2002 figures, the average worker with 20 years of service would get a pension of $1,700 a month if sick leave and vacation time were not factored in. The current practice of adding the average accrued sick and vacation payoff of $12,000 in the calculation of retirement benefits boosts the monthly pension payment by 8% to $1,833, the newspaper said.

Investing February 18, 2004

Equity, Bond Fund Inflows Set Records in January

February 18, 2004 (PLANSPONSOR.com) - January inflows into equity and balanced mutual funds (open-end, closed-end, funds underlying variable annuities, and ETFs) ran at the fastest monthly pace ever, rising to about $60 billion, according to a new research report.
Reported by

Strategic Insight (SI) said in a news release that January’s performance outpaced the prior record of $56 billion in February 2000.   These gains come on the heels of an estimated $233 billion captured by such funds for all of 2003 .

Tacking on “modest” bond fund inflows to equity fund results, January also produced the highest ever monthly pace of long-term fund inflows, which Strategic Insight estimated at $63 billion. That, according to the announcement, was about 50% higher than the previous monthly record.

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Combining strong inflows and NAV appreciation, SI estimates that during February 2004, total assets managed by all types of mutual funds (open-end, closed-end, funds underlying variable annuities, and ETFs) broke the $8 trillion mark, another all-time record .

“Investors are increasing their commitment to mutual funds where transparency, flexibility, access, and liquidity are available to everyone, not just a selected group of the wealthy class,” asserted Avi Nachmany, Strategic Insight’s Director of Research.

For more information, go to  www.sionline.com .

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