Benefits January 12, 2012

Kansas Governor Endorses 401(k)-Style Pension Plan

January 12, 2012 (PLANSPONSOR.com) – Kansas Governor Sam Brownback has given a public endorsement to create a 401(k)-style pension plan for teachers and government workers. 
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According to the Associated Press, Brownback mentioned a Kansas commission’s proposal for the new public worker retirement plan during his annual State of the State address on Wednesday. He said the 401(k)-style plan for new hires would move the state away from having an unsound public pension system. (See Commission to Recommend DC Plan for Kansas State Workers).  

The Kansas Public Employees Retirement System projects an $8.3 billion gap between anticipated revenues and benefits promised to workers through 2033. Its traditional plans guarantee benefits up front, based on a worker’s salary and years of service, rather than tying them to investment earnings.

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Administration January 12, 2012

Institutional Investors Addressing Climate Risk

January 12, 2012 (PLANSPONSOR.com) – Institutional investors that participated in a survey by Mercer addressed climate change risk via asset allocation and other initiatives.
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Mercer found more than half have decided to include climate change considerations in future risk management and/or strategic asset allocation processes, and half have undertaken or plan to make changes to their actual asset allocations.  

One-third of respondents have begun to or plan to allocate more to “climate-sensitive assets” (identified as real estate, infrastructure, private equity, sustainable equities (listed and unlisted), efficiency/renewables (listed and unlisted) and commodities (including agricultural land and timberland)). Eighty percent have or will increase their engagement on climate change with companies and policy makers.    

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The survey was a follow-up to Mercer’s 2011 “Climate Change Scenarios – Implications for Strategic Asset Allocation” collaborative study. The study found that traditional approaches to modeling strategic asset allocation fail to take account of climate change risk; therefore, new approaches to strategic asset allocation are required to tackle fundamental shifts in the global economy.  

The 2011 report and the follow-up can be downloaded from http://www.mercer.com/climatechange.  

In January 2010, the Securities and Exchange Commission provided guidance on certain existing disclosure rules that may require a company to disclose the impact that business or legal developments related to climate change may have on its business—rules that cover a company’s risk factors, business description, legal proceedings and management discussion and analysis (see SEC Draws Attention to Climate Change Reporting).  

Mercer previously said it can provide clients with a “carbon footprint” analysis of their portfolios, and compare it to a chosen benchmark, such as the FTSE All-Share, S&P 500 or Russell 1000 (see Mercer to Size Up Carbon Footprints).

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