THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, June 6, 1996 TAG: 9606060525
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
DATELINE: NORFOLK LENGTH: 43 lines
A three-day meeting of the Virginia Retirement System board opened Wednesday with a warning that the pension fund faces greater exposure to lawsuits.
``You people have deep pockets,'' W. Eric Meyer, a senior vice president of the insurance brokerage firm Sedgwick James of Virginia Inc., told board members. ``The VRS could be forced to clean up an environmental problem, and your defenses are somewhat limited.''
The VRS manages $21.7 billion of investments for 262,000 state and municipal employees and 81,000 retirees.
The state pension fund has been trying to sell a large piece of Northern Virginia real estate from its investment portfolio. In addition, public pension funds such as the VRS have become increasingly vulnerable to lawsuits because some public funds have been held to the tougher fiduciary standards of the Employee Retirement Income Security Act, Meyer said.
Dubbed ERISA, the landmark federal statute sets guidelines for managing private pension and benefit plans.
``There are some instances where VRS would be held to ERISA standards no matter what the Virginia code says,'' Meyer said.
The report on potential liabilities was part of the VRS board's annual gathering with its investment advisory committee and real estate advisory committee, held this year in Norfolk.
In an earlier meeting, the investment advisory committee recommended that the pension fund invest $60 million with a Chicago-based partnership that specializes in buyouts of small- and medium-sized corporations.
The VRS has earned hefty returns on $40 million that it already has invested with the partnership, Madison Dearborn Capital Partners, said Larry D. Kircher of the VRS staff.
The committee also recommended that the VRS hire the actuarial firm Watson Wyatt for a detailed study of VRS investments and its liabilities to future retirees. Results of the study would be used to determine how much the state and municipal governments would have to contribute to the fund.
The VRS board is scheduled to vote on those recommendations Friday. by CNB