Compliance May 6, 2010

DoL, SEC Offer TDF Primer

May 6, 2010 (PLANSPONSOR.com) - The U.S. Department of Labor’s Employee Benefits Security Administration and the U.S. Securities and Exchange Commission have published what was termed “guidance to help investors and plan participants better understand the operations and risks of target date fund investments”.
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In announcing the release, EBSA noted that, “There can be significant differences among target date funds in how they invest and how they reallocate assets between equity and fixed income investments up to and after the target date of the fund.  The guidance will assist investors and participants in assessing the benefits and risks associated with target date funds and the appropriateness of including such an investment as part of their retirement portfolios”.

Elementary Outline

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The “guidance” turns out to be a pretty elementary outline of some basic features of target date funds, including the investment mix of such funds, an acknowledgement that there are risks associated with the investments, how target date funds operate, and ways to evaluate a target date retirement fund. 

However, the latter category keeps to the elementary theme, counseling only that investors:

  • Consider your investment style
  • Look at the fund’s prospectus to see where the fund will invest your money
  • Understand how the investments will change over time
  • Take into account when you will access the money in the fund, and
  • Examine the fund’s fees.

“Investor Bulletin:  Target Date Retirement Plans” is available at http://www.dol.gov/ebsa/pdf/TDFInvestorBulletin.pdf

Administration May 6, 2010

Maryland Pension Engages Alternative Investment Consultants

May 6, 2010 (PLANSPONSOR.com) - The Maryland State Retirement Agency (SRA) today announced that it has signed two new five-year contracts with consultants to help it manage its alternative investment activities.
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According to a press release, SRA has awarded a real estate consultant contract to Pension Consulting Alliance, Inc. of Portland, Oregon, effective as of May 1, 2010.  The incumbent, PCA Real Estate Advisors, Inc., an affiliate of Partners Group in Switzerland, chose not to re-bid for the contract with SRA. 

“We are in the midst of evaluating our real estate investment strategy and look forward to PCA becoming a strategic partner in the future development of our real estate investment program”, said Mansco Perry, III,  Chief  Investment Officer.   The Agency has a 10%  target allocation to its real estate portfolio, which includes public REITS, private funds, and direct holdings.

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The State Retirement Agency also has signed a contract with Altius Associates, the incumbent private equity consultant, who has served in that role with the agency since 2004.  SRA has a target allocation of 12% to private equity.  According to the announcement, Altius will also assist the System’s investment staff in analyzing private market opportunities in its real return and credit strategies asset classes. Perry noted, “Altius has been a strong and supportive partner for us as we have developed our private equity program.  We are extremely happy that Altius will be assisting us as we move forward.”  The Altius contract is also effective as of May 1,2010.

Both engagements are to assist the Agency’s Investment Staff in the identification, evaluation, and monitoring the Agency’s alternative investment activities.  Both contracts have two, one-year renewal options. 

The Maryland Retirement System ended the third quarter on March 31, 2010 with a value of $33.7 billion.

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