Administration October 24, 2007

DoL Says Delphi Owes Employees $3M

October 24, 2007 (PLANSPONSOR.com) - The U.S. Department of Labor says Delphi Corp. did not do what it could to repay employees who lost money in their retirement plan because of an investment slip made by the company that resulted in $3 million in unrealized gains.
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According to a Detroit Free Press news report, the $3 million sought by the department would be on top of an agreement announced in early September, in which the struggling auto parts maker said it would pay employees and retirees $47 million to make up for losses in their retirement accounts (See Delphi Closer to Clearing Bankruptcy Hurdles ).

The employees and retirees had sued the company, charging that Delphi should have known that investing retirement funds in company stock as part of the Delphi Savings-Stock Purchase Program was unwise. The $46-million settlement covered individuals who traded in Delphi stock between March 7, 2000 – when General Motors Corp. spun off its auto parts division – and March 3, 2005.

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According to the news report, the company reinvested GM dividends into more GM stock instead of investing them in the fund it was supposed to. During this time, the value of GM’s stock saw a near 16% dip. The department claims that if the company would have instead invested the in the Promark Income Fund, the workers would have gained a total of $3 million.

A U.S. bankruptcy judge, who will have to sift through thousands of other claims made by parties who say the company owes them money, also must decide whether to accept the department’s $3 million secured claim.

Delphi says that it has already dealt with the mistake when in 2005 it gave workers a choice of keeping GM stock or selling the shares to buy shares in the Promark fund, plus the difference if that money had been invested correctly. The company said it paid $856,596 to 1,476 workers who asked for a change, according to the news report.

The department claims, however, that Delphi made it seem as though the workers would lose money by selling their extra GM shares because of the language it used when it told them about their options.

Investing October 23, 2007

Q307 Saw Modest Institutional Returns

October 23, 2007 (PLANSPONSOR.com) - Most U.S. institutional investment plan sponsors reported modest returns for the third quarter of 2007, according to data in the Northern Trust Universe.
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A Northern Trust news release said foundation and endowment and public fund plans gained 2.3% at the median, while corporate plans returned 2.2% for the quarter.

Emerging markets dominated the quarter, with the Northern Trust Emerging Markets universe returning 11.8% at median for the quarter and 33.6% at median for the year.

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Fixed income and private equity returns also added value during the quarter, with quarterly median program returns of 3% and 5.3%, respectively, according to Northern Trust.

Over longer time periods, plan sponsors were able to maintain solid returns, despite the increased volatility. The median foundation & endowment plan returned 13.7% over three years while the median corporate and public fund plans returned 13.4% and 13.5%, respectively, over the same period, according to Northern Trust.


“U.S. institutional plans rebounded from a poor start to post modest returns in the third quarter,” said Joe Nardulli, product manager, Northern Trust Investment Risk & Analytical Services, in the news release. “Strong equity performance during September helped pull returns for most plans into positive territory. Other asset classes also contributed to performance in the Northern Trust Universe, helping plans finish slightly ahead of the gains made by the broad market equity indexes.”

The Northern Trust Universe represents the performance results of more than 300 large institutional investment plans, with a combined asset value of approximately $700 billion, which subscribe to Northern Trust performance measurement services.

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