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A recent survey of large corporate plan sponsors by Institutional Investor Conferences
showed that 60 percent of responden...
Advisory Board

Janice Dollmann                                 William Donovan
Director, Funds Management                ...
8:00-8:05am   Welcome and Opening Remarks
              Lincoln Hall (Second Floor)

              Symposium Chairman:
   ...
9:00-9:30am    Presentation: The Magic of Pension Accounting
               Lincoln Hall

               Presented by
    ...
Dallas L. Salisbury
               President and Chief Executive Officer
               Employee Benefit Research Institut...
Presented by:
               Aaron H. Meder, FSA, EA
               Head of Asset-Liability Investment Solutions, Americas...
Presented by:
               Niels Madsen
               Former Pensions Manager
               Electrolux AB

Since inter...
Alpha beta separation can be extremely powerful. In theory, it enables investors to
choose the best sources of alpha, and ...
5:15-6:00pm    Panel Session: Can DB Plans Be Taken Off Life Support?
               Lincoln Hall

               Moderato...
Challenges for US Multinational Firms
              Library and Lincoln Hall

              Moderator:
              David...
Paul C. Morgan
              Senior Investment Consultant
              Evaluation Associates, LLC

              Panelist...
Putnam Investments

Defined contribution plans and the tools available to them are evolving very rapidly.
Specifically, th...
North American Equity Strategist and Managing Director
               UBS Global Asset Management

               Florian ...
_______________________________________________
 Institutional Investor’s Corporate Funds Symposium
Succeeding by Breaking...
A recent survey of large corporate plan sponsors by ...
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  1. 1. A recent survey of large corporate plan sponsors by Institutional Investor Conferences showed that 60 percent of respondents intend to curtail, phase out or terminate their firm’s DB plans. Additionally, 43 percent of that same pool of respondents listed “changes in laws and regulations” as their top concern for the next year. Accordingly, Institutional Investor’s Corporate Funds Symposium will address these issues within the context of what is necessary and what needs to be decided in order to break with the paradigm of the past and address the issues of the present. • For instance, what retirement benefits will take the place of the DB plans being curtailed, phased out, or terminated? • Isn’t DB a better and less expensive option, if properly managed? • How are firms coping with the potential impact reduced benefits—and thereby ultimately reduced compensation—will have on their ability to retain key talent and intellectual capital, especially as labor markets tighten? • Can broken plans be fixed? • Are there plans that can be made workable with improved investment practices (possibly involving a whole scale rejection of the classic 60/40 or 70/30 asset allocation model)? • Aren’t the tools out there for well-managed plans to earn assets meaningfully in excess of the cost of capital? Are plan sponsors taking full advantage of the full palette of investments available to earn sufficient returns? • Or do legacy costs and other aspects of many traditional defined benefit plans make them fundamentally and insurmountably unviable? Can investment performance make up only so much of the difference? This day-and-a-half program will be an intensive seminar for investment professionals from the larger US corporate pension plans. While discussion of the various investment strategies and the role of different asset classes will be threaded throughout the program, the context for this meeting will be a discussion of the crisis facing US corporate funds. Recognizing that the eventual solution to this crisis is multifold, the Symposium’s program will take a holistic view of the pensions crisis and will examine possible solutions in the form of plans’ earning higher returns as well as in addressing the ongoing viability of retirement benefits for American workers. Invited guest speakers will address the larger impact of the pensions crisis on the corporate parents of these funds, such as ramifications for balance sheets and credit ratings, rationalizing actuarial assumptions, and—for many companies—dealing with legacy costs and how defined benefit pension plans can ultimately hinder competitiveness. Preliminary program as of May 3, 2007
  2. 2. Advisory Board Janice Dollmann William Donovan Director, Funds Management Director-External Investments and Koch Industries Treasury Operations Partners Healthcare System Inc. Robert Hunkeler Vice President, Investments Michael Allan International Paper Company Vice President and Treasurer Praxair, Inc. Theodore Economou, CFA Assistant Treasurer David Isaacson ITT Corporation Treasury Manager S.C. Johnson & Son, Inc. William Rauh Director of Pension Funds Robin Diamonte Johnson & Johnson Chief Investment Officer United Technologies Corporation Karin E. Brodbeck, CFA Director, Retirement Investments Nestle Business Services Sponsoring Organizations AXA Rosenberg Investment Management Bear Stearns Asset Management Citigroup Alternative Investments Credit Suisse Asset Management Investec Asset Management JanusINTECH Institutional Asset Management Permal Group Inc. Putnam Investments Pyramis Global Advisors, a Fidelity Investments Company Quantitative Management Associates, LLC UBS Global Asset Management Monday, May 14 7:20-8:00am Registration and Continental Breakfast Library (Second Floor) _______________________________________________ Institutional Investor’s Corporate Funds Symposium Succeeding by Breaking with the Paradigm of the Past May 14-15, 2007 ~ Union League Club, New York Page 3 of 15
  3. 3. 8:00-8:05am Welcome and Opening Remarks Lincoln Hall (Second Floor) Symposium Chairman: Dwight Kadar Former Director, Investment Management Cooper Industries Ltd. 8:05-9:00am Panel Session: The Future Is Now Out of Plan Sponsors’ Control: Enter the CFOs and the Regulators Lincoln Hall Moderator: Dwight Kadar Former Director, Investment Management Cooper Industries Ltd. Panelists: Warren L. Machol Senior Managing Director Bear Stearns Asset Management Stephen McCaffrey Senior Counsel for Plans KeySpan Corporation Drew Lawton President and Chief Executive Officer Pyramis Global Advisors, a Fidelity Investments Company David Hammerstein, CFA Principal Yanni Partners, Inc. Plan sponsors have never worked in a vacuum. They’ve always been obliged to listen to their beneficiaries, their corporate parents, and sometimes their consultants. Increasingly, however, more influence than ever is being given to CFOs, CEOs, actuaries, and regulators. This panel will set the stage for the following sessions by positing that the future is increasingly out of the control of plan sponsors and what this means to our attendees. _______________________________________________ Institutional Investor’s Corporate Funds Symposium Succeeding by Breaking with the Paradigm of the Past May 14-15, 2007 ~ Union League Club, New York Page 4 of 15
  4. 4. 9:00-9:30am Presentation: The Magic of Pension Accounting Lincoln Hall Presented by David Zion, CFA, CPA US Accounting and Tax Policy Analyst Credit Suisse Asset Management The smoothing mechanisms in the accounting rules and funding rules protected companies from their pension plans for a long time, making the plans appear almost risk free. The deteriorating health of the plans in 2001 and 2002 made it clear they’re not. Clearly pension plans are exposed to a number of risks, including inflation, longevity, liquidity, and many are making huge bets on interest rates. As the rules change (FAS 158 brought the pension plans funded status on balance sheet for the 2006 year end, the Pension Protection Act will start affecting pension funding requirements in 2008, and the FASB should begin phase 2 of its pension project this year) and become more mark to market oriented. the risks in the plan become even clearer. That has more companies at least thinking about better managing the risks in their pension plans, possibly sparking significant changes in behavior, including three big ones: (1) more plans being frozen; (2) plans being terminated; and (3) changes in asset allocation. Remember, defined benefit pension plans are still a $4 trillion industry in the U.S. that includes both corporate and public pension plans. Changes in behavior by pension plan sponsors could have far reaching macro and capital market implications. 9:30-10:00am Coffee Break Library 10:00-10:45am Panel Session: The Legislative and Regulatory Context for the Decisions Plan Sponsors are Making Lincoln Hall Panelists: Christian E. Weller, Ph.D. Senior Economist Center for American Progress James M. Delaplane Jr., Esq. Partner Davis & Harman LLP _______________________________________________ Institutional Investor’s Corporate Funds Symposium Succeeding by Breaking with the Paradigm of the Past May 14-15, 2007 ~ Union League Club, New York Page 5 of 15
  5. 5. Dallas L. Salisbury President and Chief Executive Officer Employee Benefit Research Institute As the previous session argued, much of what corporate plan sponsors are dealing with today is being driven by powers increasingly beyond their control. Or at least it seems that way sometimes. This session will deliver insiders’ perspectives on that bastion of out-of-controllness, Washington, DC, and what those meddling politicians are doing that will change your lives, the lives of your employees and retirees, and your corporations. 10:45-11:15am Presentation: Trends in the Institutional Marketplace Lincoln Hall Presented by: Michael Maquet Managing Director Quantitative Management Associates, LLC It is often said that the markets are driven by fear and greed. This discussion will examine the factors that are impacting institutional investors' decisions, and will look at some of the resulting behaviors and product demand that arise as a consequence. 11:15-11:45am Presentation: Engineering Quantitative Tools for Hedge Fund Risk Management and Structuring Portfolios Lincoln Hall Presented by: Julian Shaw Head Risk Manager Permal Group Hedge funds are generally considered to present unique analytical challenges for structuring portfolios and managing risk. Further, serial correlations, fat tails, abnormal distributions, a lack of data, problems with linear optimizers and other issues complicate the task. This session will explore engineering techniques that when applied to quantitative tools can respond to these difficulties. 11:45-12:15pm Presentation: Asset-Liability Solutions for Defined Benefit Pension Plans Lincoln Hall _______________________________________________ Institutional Investor’s Corporate Funds Symposium Succeeding by Breaking with the Paradigm of the Past May 14-15, 2007 ~ Union League Club, New York Page 6 of 15
  6. 6. Presented by: Aaron H. Meder, FSA, EA Head of Asset-Liability Investment Solutions, Americas and Director UBS Global Asset Management Defined benefit pension solvency issues, along with pension accounting and funding reform are bringing increased transparency and scrutiny to corporate balance sheets— and are causing many to ask the question, "What should I do with my pension plan?” The answer to this question is multifaceted, and requires a holistic view of the sponsoring entity's financial situation, goals and human resource policies. What better ways are there of managing the funding ratio volatility of plans while simultaneously focusing on the return generation required to defease future liabilities? This session will discuss steps that can be taken to make plans more efficient relative to their liabilities and show how a client’s unique situation drives the appropriate and most efficient solution for them. 12:15-1:00pm Facilitated Working Groups Lincoln Hall Facilitator: Eddie Deschapelles Senior Vice President Permal Group Aren’t the tools out there for well-managed plans to earn meaningful returns in excess of the risk-free rate? Are plan sponsors taking full advantage of the full palette of investments available to earn sufficient returns? So what are these solutions? Learn—by speaking with them—what your peers have done. Discussion will include the following issues: • Do you link your actuarial liability analysis to your asset allocation? • How are asset allocation decisions optimized? • Who is responsible for these allocation decisions? The staff or the trustees of the plan? • How much do you rely on consultants for these decisions? • Are you using alternatives, LDI, portable alpha to best effect? 1:00-2:15pm Lunch with Guest Presentation: Pension Asset and Liability Management from a Group Treasury Perspective: A Case Study Mary Murray Room (Fourth Floor) _______________________________________________ Institutional Investor’s Corporate Funds Symposium Succeeding by Breaking with the Paradigm of the Past May 14-15, 2007 ~ Union League Club, New York Page 7 of 15
  7. 7. Presented by: Niels Madsen Former Pensions Manager Electrolux AB Since international accounting standards rewrote the rule book, heads of corporate finance have been grappling with the pension problem. So, what have they come up with? What solutions have they identified? In this case study, we will examine how corporate treasuries might see the pension issue differently from investment staff and committees. 2:15-2:45pm Guest Presentation: Town Hall Meeting on FAS 158 and Other Issues Lincoln Hall Presented by: George J. Batavick Board Member Financial Accounting Standards Board Former Comptroller Texaco Inc. This expert will make himself available to answer delegates’ questions about the accounting and attendant issues that are having such an enormous impact on corporate plans today. He will provide us with of-the-moment insights into FASB’s current and future priorities as they relate to the accounting for pension plans, including Phase II of the Board’s pension accounting project. 2:45-3:15pm Presentation: To be determined Lincoln Hall Presented by: Leo M. Tilman Chief Institutional Strategist Bear Stearns & Co. 3:15-3:45pm Presentation: Alpha Investing: Promises and Pitfalls Lincoln Hall Presented by: Vineet Budhraja Director, Global Research Citigroup Alternative Investments _______________________________________________ Institutional Investor’s Corporate Funds Symposium Succeeding by Breaking with the Paradigm of the Past May 14-15, 2007 ~ Union League Club, New York Page 8 of 15
  8. 8. Alpha beta separation can be extremely powerful. In theory, it enables investors to choose the best sources of alpha, and reduce risk by combining multiple alpha sources within a portfolio. Unfortunately, few investors have realized these benefits in practice, and many have implemented alpha beta separation in a limited fashion. In this session, we examine some of the practical challenges investors face when separating alpha and beta, and describe new tools that they can use to extract more value from the alpha portion of their portfolios. 3:45-4:15pm Presentation: Today’s Pension Investing Playbook: Key Strategies for a New Era Lincoln Hall Presented by: Peter Chiappinelli Senior Vice President, Strategic Services Pyramis Global Advisors, a Fidelity Investments Company U.S. corporate and public pensions are wrestling with new legislation, accounting standards, reporting requirements and funding status questions. This session will present the results of the 2007 DB survey, which polled DB plan sponsors in Q4 2006 to assess the impact of these decisions and provide a comprehensive look at pension investing strategies in a new era. 4:15-4:45pm Coffee Break Library 4:45-5:15pm Presentation: How Human Behavior Creates Inefficient Markets Lincoln Hall Presented by: James Hand Senior Portfolio Manager, Head of 4Factor Global Equity Research Investec Asset Management In this session, the speaker will look at the issue of market efficiency and discuss how investor psychology helps to create inefficient markets. Through some very interesting interactive examples, he will show how all of us react to information and commit behavioral investment errors. Finally, he will address the key question of whether these behavioral inefficiencies can be consistently exploited from an investment perspective to generate alpha. _______________________________________________ Institutional Investor’s Corporate Funds Symposium Succeeding by Breaking with the Paradigm of the Past May 14-15, 2007 ~ Union League Club, New York Page 9 of 15
  9. 9. 5:15-6:00pm Panel Session: Can DB Plans Be Taken Off Life Support? Lincoln Hall Moderator: Matt Stroud, CFA Practice Leader, Greater New York Watson Wyatt Investment Consulting Panelists: Thomas R. O’Connor Assistant Treasurer The Aerospace Corporation Thomas C. Deas, Jr. Vice President & Treasurer FMC Corporation Michael Allan Vice President and Treasurer Praxair, Inc. It might be argued that some plans, whether due to legacy costs or other issues, are not fit to survive, while other plans can be made viable with the appropriate asset allocation, investment strategies, and willingness to take risks within certain parameters. This session will discuss the factors that are within plan sponsors’ ability to control and which may determine the immediate, medium-, and long-term viability of their plans. One of the panelists will argue that it’s basically for naught for many corporate plans. 6:00pm Departure for cocktail reception and dinner at Country Some things are worth the wait, and according to The New York Times, the restaurant Country – “inanely named, impressively realized” – is among them. The article went on to describe the restaurant as a first-rate experience, united and distinguished by (its) classically French inclinations and unusually expert cooking. Join us, and more importantly your colleagues and associates, for an incomparable evening at one of New York’s newest and finest establishments. Tuesday, May 15 8:00-9:00am Breakfast with Panel Session: Managing Global Pension Schemes: _______________________________________________ Institutional Investor’s Corporate Funds Symposium Succeeding by Breaking with the Paradigm of the Past May 14-15, 2007 ~ Union League Club, New York Page 10 of 15
  10. 10. Challenges for US Multinational Firms Library and Lincoln Hall Moderator: David Isaacson Treasury Manager S.C. Johnson & Son, Inc. Panelists: Jim Dwyer Vice President, Worldwide Benefits, Health and Safety American Express Niels Madsen Former Pensions Manager Electrolux AB Jack Miller Chief Client Officer General Motors Asset Management Peter Kraneveld International Pensions Expert Former Chief Economist PGGM If a US multinational company historically sponsored a DB retirement plan for its US workforce, it also likely sponsors similar DB retirement plans in many of its non-US operations. Improving the management and oversight of these non-US plans has become critical in light of shifts in the pension landscape including changes in pension accounting (i.e., FAS 158, FRS 17, IAS 19) and local pension regulation, as well as other factors such as SarBox, mortality changes, and HR strategy migration that favors DC plans over DB plans. US multinational firms must decide how best to coordinate a variety of pension management activities including actuarial valuation work, funding choices, investment management and consulting efforts, as well as custodial and other administrative areas. 9:00-9:45am Panel Session: An Action Plan for Corporate Funds’ Investment Success Lincoln Hall Moderator: _______________________________________________ Institutional Investor’s Corporate Funds Symposium Succeeding by Breaking with the Paradigm of the Past May 14-15, 2007 ~ Union League Club, New York Page 11 of 15
  11. 11. Paul C. Morgan Senior Investment Consultant Evaluation Associates, LLC Panelists: David Beeman Head of Multi Alpha Strategies Citigroup Alternative Investments Joseph Cherian Managing Director and Head of Quantitative Strategies Group Credit Suisse Asset Management Steve W. Paddon Managing Director, US Institutional Investec Asset Management Amy B. Walls, CFA Managing Director Director, Strategic Research Team Putnam Investments Many corporate plan sponsors feel strongly that an adherence—overt or in disguise—to the classic 60/40 (or 70/30, if you will) allocation is one of the fundamental factors crippling US pension funds. This session will look at the ways that investors can improve the financial viability of their plans by investing better. Does this mean jettisoning the classic asset allocation model or can layers of portable alpha and other returns-enhancing strategies do the trick? At the same time, how can investors be smatter about beta (eg, reducing their reliance on equities, including more diversity, and using more leverage) as well as smarter about alpha (decoupling allocations to alpha and beta, utilizing alphas in combination in the same way beta allocations are made, and differentiating between alpha and what is really underlying beta). 9:45-10:15am Presentation: The Best of Both Worlds: Leveraging the Strengths of DB for Your DC Plans Lincoln Hall Presented by: Christopher C. Thompson Managing Director Director, Defined Contribution Institutional Business _______________________________________________ Institutional Investor’s Corporate Funds Symposium Succeeding by Breaking with the Paradigm of the Past May 14-15, 2007 ~ Union League Club, New York Page 12 of 15
  12. 12. Putnam Investments Defined contribution plans and the tools available to them are evolving very rapidly. Specifically, they are increasingly including investment strategies and vehicles that have been reserved historically for DB plans. This trend is accelerating and provides an opportunity to increase our reliance on DC without being constrained by traditional structures. This session will explore the future of DC, specifically as it relates to taking the strengths of DB plans and incorporating them into this new framework. 10:15-10:30am Coffee Break Library 10:30-11:00am Presentation: Why All Growth is Not Created Equal Lincoln Hall Presented by: Stephanie Pierce Senior Vice President & Managing Director, Client Portfolio Management JanusINTECH Institutional Asset Management Growth alone does not lead to value creation; therefore, executives must consider the cost of that growth. Failing to do so will most likely lead to value destruction. Because investment capital drives growth and has an underlying costs, companies should seek to maximize the return on shareholder capital and the return on each incremental dollar of cash flow generated. This session will provide key insights into how the Return on Investment Capital (ROIC) metric can help identify a company’s sustainable, long-term value creation potential, and the benefits this can have for investors. 11:00-11:45am Panel Session: 130/30 Strategies Lincoln Hall Moderator: Stephanie Pierce Senior Vice President & Managing Director, Client Portfolio Management JanusINTECH Institutional Asset Management Panelists: Michael Maquet Managing Director Quantitative Management Associates, LLC Thomas J. Digenan, CFA, CPA _______________________________________________ Institutional Investor’s Corporate Funds Symposium Succeeding by Breaking with the Paradigm of the Past May 14-15, 2007 ~ Union League Club, New York Page 13 of 15
  13. 13. North American Equity Strategist and Managing Director UBS Global Asset Management Florian Weber Senior Associate Wilshire Associates Incorporated With recent capital market returns below plan sponsors’ required rates of return—and the future not looking much brighter—what can plan sponsors do to improve the return on their pension assets? This presentation will examine one strategy that can increase returns without dramatic increases in a plans risk profile: The use of long-short equity strategies such as 130/30. This session will explore how these differ from an equitized long-short strategy as well as the benefits and risks of the strategy, differing investment styles, and the right mix of long and short positions. Ultimately, is 130/30 the most appropriate leverage ratio? 12:00-12:30pm Presentation: To be determined Lincoln Hall Presented by AXA Rosenberg Investment Management 12:30-2:00pm Lunch with Guest Speaker: Lessons from the Corporate World to Us Taxpayers Mary Murray Room Speaker: Thomas Mackell, Jr. Chairman Federal Reserve Board of Richmond President Association of Benefit Administrators Media headlines show that the pension liability issues that corporations have been dealing with are now becoming a problem for public pension funds. Recent labor actions in New Jersey give evidence of the potential for these problems to grow as public employees expect rising benefits and taxpayers become increasingly hesitant about funding seemingly unlimited and rising liabilities. This speaker will provide his expert perspective on how the lessons learned in the corporate world might or might not be applied to the public world and the ramifications for us all. 2:00pm Symposium Concludes _______________________________________________ Institutional Investor’s Corporate Funds Symposium Succeeding by Breaking with the Paradigm of the Past May 14-15, 2007 ~ Union League Club, New York Page 14 of 15
  14. 14. _______________________________________________ Institutional Investor’s Corporate Funds Symposium Succeeding by Breaking with the Paradigm of the Past May 14-15, 2007 ~ Union League Club, New York Page 15 of 15

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