Administration January 26, 2009

MD Pension Fund Suffers $27B 2008 Setback

January 26, 2009 (PLANSPONSOR.com) - Maryland taxpayers will have to pay an additional $215 million into the state's pension system on top of the already budgeted $1.3 billion, due to market losses, lawmakers were informed last week.
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A Baltimore Examiner news report said Maryland has lost 15% of its investments in the past three months and nearly 29% in 2008 for a total year-end loss of $27 billion.

To counter losses, pension system chief investment officer Mansco Perry said he has increased the level of cash available to 10% of the pension fund’s holdings. Officials from the State Retirement and Pension System included the loss details in testimony before the state Senate Budget and Taxation Committee.

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The pension officials said without a market turnaround, the state will either have to up its contribution or ask employees to chip in more, the newspaper reported.

Administration January 23, 2009

GM Settles with SEC over Pension Accounting Charges

January 23, 2009 (PLANSPONSOR.com) - General Motors Corp. and the U.S. Securities and Exchange Commission reached a settlement Thursday over charges that the company improperly represented pension estimates in 2002.
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The Detroit Free Press reports GM was not fined by the SEC, but the auto giant agreed to follow SEC regulations in the future and is subject to a federal injunction under which it would face stiff penalties for any future violations. GM did not admit or deny any wrongdoing.

“The injunctive remedy should provide strong incentives for General Motors to maintain strong accounting and disclosure practices,” said Frederic Firestone, associate director in the SEC’s enforcement division, in the news report.

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The SEC alleged in its 2004 lawsuit that GM made significant misstatements or omissions in a 2002 filing about its pension discount rate for 2002 and its expected return on pension assets for 2003. The complaint also alleged that GM failed to disclose material information about the timing and amount of its projected cash contributions to its pension plans, according to the Free Press.

GM said it made mistakes, but not with the intent to deceive shareholders.

The automaker recently agreed to pay about $39 million to settle a lawsuit over company stock investments in its 401(k) plan (see GM Settlement of Company Stock Suit to Include $39M Payment ). That suit claimed the company put its interests ahead of the interests of plan participants by continuing to offer GM stock as an investment option, matching employee contributions in GM stock, and failing to diversify the stock fund when it was clear GM stock was not a prudent investment during the time GM was struggling financially and its accounting was being reviewed by the SEC.

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