The Markets January 5, 2009

College Savings Plans Hit Hard by Oppenheimer Fund Loss

Parents’ savings for their children’s college educations took a big hit as a bond fund offered by at least four state 529 plans lost more than a third of its value last year.
Reported by

The Oppenheimer Core Bond fund fell 36% last year, versus a loss of about 5% for the average intermediate-term bond fund, according to Morningstar and reported by USA Today. Morningstar said the losses stemmed from the management team’s decision to take big bets on mortgage-backed securities and credit default swaps.

Programs affected include:

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  • The Texas College Savings Plan: Its blended age-based portfolio for people 18 years and older has 50% of its assets in the fund. The portfolio fell 21% in 2008.
  • ScholarsEdge, a 529 plan offered by New Mexico: It has 25% of its age-based portfolio for those 18 and older invested in the fund, according to the plan prospectus. That portfolio dropped 17% last year.
  • Maine’s NextGen College Investing Plan: It offers a balanced fund portfolio that has 40% of its assets in the fund. Through November 28, the most recent information available, according to USA Today, the portfolio was down more than 42%.
  • Oregon’s College Savings Plan: It has 20% of its ultra-conservative portfolio—aimed at parents of children who are in college—in the Core Bond fund. That portfolio fell 9% last year.

Kevin Deiters, director of educational opportunities for Texas’ comptroller’s office, told the newspaper state officials are disappointed in the fund’s performance but have not made any decisions about whether to replace it. Michael Parker, executive director of Oregon’s College Savings Network, said it has launched an investigation with the state attorney general’s office to determine whether Oppenheimer misled investors.

Oppenheimer has installed new leadership for the fund’s management team, spokeswoman Jeaneen Pisarra told USA Today.

The Markets January 5, 2009

NCR Reduces 401(k) Match

An unconfirmed memo by NCR Corp.’s CEO said effective immediately the company will reduce its employer match for 401(k) plan participants.
Reported by

According to the Dayton Business Journal in Dayton, Ohio, CEO Bill Nuti said in a December 29 memo to employees: “Whatever the newsmakers choose to name it, the current economic situation and macro 2009 outlook remain challenging.” NCR spokesperson Alan Ulman told the Business Journal the company does not comment on internal memos and he would not verify it.

The news report claims the company also will cancel a $5 million travel program given annually to employees who win achievement awards. Nuti said in the memo that all international benefit plans, such as pension plans and retirement plans, are under review and he expects another announcement this month about them.

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According to the news report, in late November, Nuti made a similar announcement that included canceling holiday parties and business travel and eliminating merit pay raises for employees, including executives.

NCR froze its defined benefit pension plan as of December 31, 2006, and announced it was increasing its 401(k) match to 100% of the first 4% of participant deferrals and 50% of the next 2% of deferrals (see “NCR Announces Pension Freeze“).

A number of companies have announced either reductions in or suspension of 401(k) matching contributions to cut expenses during the economic downturn (see “GateHouse Media Discontinues 401(k) Match“).

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