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July 31, 2006
Will the Pension Bill Benefit Hedge Funds?
The dream may soon become a reality. If the US Congress passes the current bill on pension system, hedge funds may be entitled to manage more pension fund money. Negotiations are going on about a bill shoring up the country's defined-benefit pension system. Under the provisions of the bill, the lightly regulated investment pools would be allowed to do away with a ceiling on how much money they can take from pension plans.
These types of transactions will allow pensions to reduce costs and give pensions more flexibility and options for diversification. The House will vote on this bill on 4th August and the Senate will consider it next week.
A short provision in the massive bill allows hedge funds, the lightly regulated investment pools, to do away with a ceiling on how much money they can take from pension plans. They have traditionally limited the amount of pension-fund money they will take to 25% of their total assets.
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