Dozens of Pension Funds Are Reviewing PIMCO Investments After Bill Gross Departure

scissors cutting a one dollar bill in half

The United States’ public pension funds have tens of billions of dollars invested with PIMCO. But dozens of funds have put PIMCO on their “watch” lists – if they haven’t exited PIMCO already. From Bloomberg:

Illinois’s teacher retirement system, with $3 billion invested with Newport Beach, California-based Pimco, has had the money manager on its watch list since February, when former Chief Executive Officer Mohamed El-Erian left, according to an article published today. Texas Municipal Retirement System put Pimco on watch after Gross’s departure.

Managers of New York City’s retirement systems are reviewing $7.08 billion in Pimco investments, while those overseeing plans in Michigan, Indiana and North Dakota are monitoring the situation, according to the article.

A San Francisco city and county plan’s committee this week will hear from a consultant about $82 million invested in Pimco’s Total Return Fund. (PTTRX) A termination would mark the first time it has eliminated an offering, according to the interview with Jay Huish, the system’s executive director.

Gross, 70, who co-founded Pimco more than four decades ago, left last month for Janus Capital Group Inc. (JNS) after deputies threatened to quit and management debated his ouster. His departure prompted investors to review their Pimco holdings and triggered $23.5 billion in redemptions in September from the $201.6 billion Total Return Fund, which he previously ran.

Gross’s new Janus Global Unconstrained Bond Fund received $66.4 million in subscriptions last month, according to Morningstar Inc.

The Florida Retirement Systems, one of the largest public funds in the country, announced last week it would cut its investments with PIMCO.

Public Retirement Plans For Private-Sector Workers Gain Momentum In States

401k sack filled with one hundred dollar billsThe federal government has been throwing around ideas lately to create a publicly run retirement system that would cover private sector workers who don’t have access to retirement plans through their employers.

But states, including California, Illinois, Indiana, Minnesota and a dozen others, are developing and implanting similar ideas, as well. A breakdown of some of these programs from Investopedia:

California is looking to enact a plan that is still awaiting approval from the Internal Revenue Service. The law allows for the introduction of a retirement savings plan for the employees of small non-profit organizations. The plan would offer several investment options to its participants and allows for contributions to be made by employees or employers. (For more, see: Retirement Planning: An Introduction.)

Also in 2012, California’s governor Jerry Brown signed into law the California Secure Choice Retirement Savings Trust Act. The law allows for the launching of individual retirement accounts for employees who work at businesses that do not offer them a plan. The plan calls for employees to be automatically enrolled in the plan through a payroll deduction of 3%, while also giving them the option to opt out of the plan.

In Indiana:

State Senator Greg Walker introduced a bill that would establish a retirement savings plan for state workers who don’t have access to one. The bill is currently pending in the state’s Senate Tax and Fiscal Committee. Indiana Retirement Savings Board would run the program, and the plan, which includes a tax credit of up to $250 for participants, would allow both employees and employers to take part in the plan.

And in Minnesota:

The Minnesota Secure Choice Retirement Savings Plan Establishment was introduced by State Senator Sandra Pappas earlier this year. The bill requires the state to develop a retirement-savings program for state private-sector employees who work at companies that don’t offer them. Approved by two Senate committees, the bill is now awaiting action in a third one.

The Investopedia article also covers similar legislation in Illinois and West Virginia.


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