Investing October 20, 2003

Strategic: Equity and Balanced Funds Take in $25 Billion in September

October 20, 2003 (PLANSPONSOR.com) - Inflows to equity and balanced-type funds neared $25 billion in September.
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For the entire third quarter across all these investment vehicles reached an estimated $85 billion, a much greater amount than the previous quarter’s $72 billion (See  Strategic: Equity and Balanced Funds Take in $25 Billion in June ).   In fact, the third quarter’s inflow numbers were the highest quarterly inflows for equity and balanced-types funds since the first quarter of 2000, according to data from Strategic Insight.

The good times are expected to only roll on for these investment types too.   Assuming only modest fluctuations in stock prices through the end of 2003, Strategic projects that for all of 2003, inflows could near $200 billion.

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September also marked a stabilization of bond redemption numbers to an outflow of only $5 billion, less than half the temporary elevated redemptions recorded in August.

Compliance October 17, 2003

Congressional Cash Balance Opponents Tout "Win"

October 17, 2003 (PLANSPONSOR.com) - Four Congressional anti-cash balance plan activists jubilantly claimed a victory Friday after getting word that the Bush Administration would pursue its cash balance plan goals legislatively instead of through rulemaking.
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>In a letter to their congressional colleagues, US Representatives George Miller (D-California), Bernie Sanders (I-Vermont), Maurice Hinchey (D-New York) and Rahm Emanuel (D-Illinois) quoted an October 10 speech by US Treasury Assistant Secretary for Tax Policy Pamela Olson. According to the letter, Olson told the Practicing Law Institute at a New York meeting that administration officials had decided to avoid a possible prolonged court fight over the controversial retirement plans and, instead, work through the House and Senate.

>The object of the coalition’s efforts were proposed rule changes announced in December 2002 that would permit employers to convert their longstanding defined benefit pension plans to cash balance plans.

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“It appears that the Bush Administration has been forced to back down from its proposal to allow the slashing of pension benefits for millions of employees and retirees throughout America,” the four lawmakers wrote. 

>Last month, the House approved a controlversial amendment blocking any new government cash balance rules. Sanders sponsored the amendment to a Transportation/Treasury Appropriations measure; Miller and Hinchey signed on as co-sponsors (See  Emotion Charged Cash Balance Plan Amendment Passes US House ).

“The proposed rules were extremely controversial because they would allow the pensions promised to older workers to be dramatically reduced, by as much as half,” the letter said. “Tens of thousands of employees and retirees protested these ill-advised regulations, coming in the wake of millions of Americans losing much of their retirement security through the collapse of 401(k) plans and the scandalous behavior of pension managers.”

The four lawmakers said they could accept the Bush Administration effort if it went through normal legislative channels. “If that (cash balance) legislation is developed and considered in a fair and balanced manner, we will have an opportunity to improve the pension security of millions of Americans who just a few days ago faced the imminent loss of billions of dollars in their retirement funds,” the letter said.

A federal judge ruled in August that International Business Machines Corp. (IBM) discriminated against older workers in the calculations used in its conversion to a cash balance plan in 1999 (See   Murphy’s Law: IBM Loses Cash Balance Ruling ).

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