VOL. 123 | NO. 152 | Tuesday, August 5, 2008
Federal Pension Agency Seeks Investment Partners
By CHRISTOPHER S. RUGABER | AP Business Writer
WASHINGTON (AP) - The federal agency that backs the retirement benefits of 44 million Americans is seeking financial firms to invest about $2.5 billion of its assets in private equity and real estate.
The Pension Benefit Guaranty Corp. adopted a new policy in February to shift a greater portion of its $55 billion in assets to stocks and alternative investments such as private equity funds.
"As our investment portfolio has become increasingly diversified, we are using more sophisticated techniques to mitigate risk and safely enhance returns," PBGC Director Charles Millard said in a statement Friday.
The agency said that to be eligible, financial companies must have worldwide operations and have successfully managed private equity or real estate investments before.
The PBGC also hopes to engage two or three firms in "strategic partnerships" that would include extensive consulting services, such as staff training.
Bids are due Aug. 28 and the winning firms will likely be announced this fall, according to a PBGC spokesman.
The agency, which has a $14 billion deficit, said in February it would shift its asset allocation to 45 percent stocks, 45 percent bonds, and 10 percent in alternative investments. Previously, it had a target of 15 percent to 25 percent in stocks, though the actual figure reached 28 percent last year.
The PBGC's assets are currently managed by professional firms or invested in market indexes. The agency is financed by premiums paid by employers, assets from failed pension plans, recoveries from bankruptcies and returns on invested assets.
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