Tuesday, January 29, 2002

City lost money when Enron fell


$7.9 million belonged to retirement system

By Gregory Korte
The Cincinnati Enquirer

        The city of Cincinnati's employee retirement system had nearly $8 million in Enron Corp. stock when the company collapsed — and lost almost all of it.

        But city officials are quick to emphasize that the $7.9 million loss was just 0.33 percent of the plan's $2.33 billion in assets.

        “We're concerned about the loss, but it doesn't have as much of an impact on our retirement system as some others around the country,” said Bill Moller, Cincinnati's acting finance director.

        Still, he said, the city will meet with the fund's money managers to determine why the city didn't bail out of its failing investment sooner.

        The city's 71-year-old retirement fund — the oldest in the state — has 11,000 members.

        State law prohibits tax money from being invested in common stock or other investments that would put the principal at risk. But pension plans, which public employees pay into, are allowed to invest in individual companies.

        The Public Employees Retirement System of Ohio lost $59 million in Enron stock — less than 0.1 percent of its $54 billion portfolio. And the State Teachers Retirement System lost $65 million, which is about 0.12 percent of its assets, worth $51 billion.

        “Obviously with any loss like that, it hurts. But it's like if you had $1,000 and lost a buck twenty,” said Herbert F. Dyer, director of the teachers' pension plan.

        All the pension managers said the losses would not affect their ability to pay benefits.

        Most pension plans that use indexing — buying stocks in their proportion of the S&P 500 index — would have significant holdings in Enron.

       



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