07.21.26
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Today’s Question

By: Russ Kamp, CEO, Ryan ALM, Inc.

As I’ve reported in this blog several times, we frequently get replies/comments to our many blog posts (now >1,820 posts). In fact, we encourage the exchanges, so please keep them coming. Here is an example of a recent question from a public fund DB pension plan sponsor, but it could be from anyone involved in the management of pension assets:

Trustee: “If cash flow matching (CFM) is such a great idea, why isn’t every consultant recommending it?”

Russ: Some consultants do recommend CFM, but most consultants (and industry participants) have been trained over decades to invest pension assets with the goal to outperform generic asset class benchmarks in pursuit of achieving the annual return on assets (ROA). We, at Ryan ALM, don’t believe that is the primary objective when managing a pension plan.

We start with a different premise. We ask, ‘What is the purpose of these pension assets? If the purpose is to pay promised pension benefits, then the first responsibility in managing pension assets should be to use an investment strategy that produces the cash flow needed to make those payments without being forced to sell investments or sweep dividend income and capital distributions from a plan’s alpha or growth strategies. Once you’ve secured those benefit payments, the remaining assets can pursue growth with far less urgency, as they will have a much longer investing horizon in which to achieve the desired return and help meet future pension liabilities.

DB pension plans need to be protected and preserved. Continuing on a course solely focused on return only ensures volatility of the funded status and contributions. It doesn’t guarantee success. Using CFM brings an element of certainty to a very uncertain process.

Please keep your questions coming!

07.20.26
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ARPA Update as of July 17, 2026

By: Russ Kamp, CEO, Ryan ALM, Inc.

Welcome to the middle of July. Canadian forest fires made for a hazy couple of days in New Jersey during the last week. That smog was somewhat representative of the cloud of uncertainty still hanging over the PBGC’s implementation of the ARPA pension legislation and the 80 Mass Withdrawal funds residing on the waitlist. There doesn’t seem to be any further news on how, or even if, they will be addressed by the PBGC.

What we do know, is that Chicopee, MA-based Roofers and Slaters Local No. 248 Pension Plan, received approval for its SFA application. They will receive $5.8 million in SFA and interest for its 211 plan participants. This is the 165th pension fund to receive SFA grants. To date, $77.9 billion in SFA and interest has gone to support >2 million American workers and retirees.

As the program is winding down, there isn’t much else to report on. There are currently seven revised applications before the PBGC. Esch one is from a non-priority fund. Pension Plan of the Automotive Machinists Pension Trust is the most likely to have action taken on its application next, as the PBGC must act by July 20, 2026 or the application is automatically approved. They are hoping to receive an SFA grant of $139.1 million for just under 7,500 participants.

We hope that you have a great week. Please don’t hesitate to reach out to us if you’d like to learn how cash flow matching (CFM) can secure your SFA and maximize the coverage of benefits.

07.17.26
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DB Pension Plans: Only One Certainty

By: Russ Kamp, CEO, Ryan ALM, Inc.

As you look at the landscape for defined benefit pension plans, it is readily apparent that there is only one CERTAINTY. Each month your fund must fulfill a promise. Benefit payments (and expenses) can’t wait to be paid. Like clockwork, B&E come due each month whether markets have behaved or suddenly made finding liquidity a challenge. What have you done to make sure that those obligations are met?

Pension plan management is primarily focused on the fund’s assets. Sponsors and their advisors put together an asset allocation framework that is singularly focused on the annual required return on assets (ROA). But those asset allocation frameworks come with a lot of volatility and uncertainty. Many factors contribute to market movements. Each one out of the control of the pension sponsor.

Do you know where stocks will be trading in 1-hour let alone 1-month, 1-year, or 1-decade? How about inflation? Interest rates? What about the Middle East, Ukraine, China, etc.? Why live with such uncertainty?

How comforting would it be to know what a pension fund’s annual contributions will be for the next 10-, 20- or 30+-years? No guessing, no budgeting woes, and no unfortunate spikes in annual contributions for public systems that harm one’s ability to support the social safety net. The process that can create this level of certainty has been used for decades: Cash Flow Matching (CFM).

As previously mentioned, current pension management approaches are return focused, which only guarantees volatility. Volatility in returns, contributions, and funded status! A CFM approach, which is the careful matching of asset cash flows (principal and interest) with the liability cash flows of benefits and expenses, will bring certainty (outside of a rare IG default) to the management of DB pensions. Importantly, liquidity is created and available when needed. There is no forced selling to fulfill those commitments. No scraping of dividend income which is detrimental to the long-term success of the equity program.

Importantly, a CFM program also “buys time” for the residual assets (presumably the alpha assets) to grow unencumbered with the goal to meet future liabilities. A longer investing horizon will dramatically enhance the probability of those assets meeting long-term return expectations.

Given that there is currently only one certainty (monthly obligations) for sponsors of DB pension plans, wouldn’t it be beneficial to create another level of certainty through the SECURING of the monthly promises? Why wait, especially given all the uncertainty facing market participants today? Ryan ALM, Inc. is always willing to provide you with a free analysis of what CFM could do for your fund. We’re ready to help you sleep better at night.

07.16.26
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Getting Closer!

By: Russ Kamp, CEO, Ryan ALM, Inc.

I’ve written a couple of times about SPCX and the ridiculous market action that propelled the stock following its IPO at $135 to a high of just over $225. On June 16th, I published my first post asking if SPCX was just another meme stock. I followed up the next day with the post, “Just Another Value Stock???” after learning that a large-cap value ETF had added the stock to its portfolio. The closing price on 6/16 was $202 following three challenging days of trading. Today, SPCX is trading at $132.69 at 12:49 pm (7/16/26). Perhaps that LC Value ETF was onto something. If the recent significant fall in price continues, SPCX might just become a value stock! Just because a company has an out of this world thesis, doesn’t mean that it’s a good stock. I have no idea where the company’s stock will trade going forward. I do know that ultimately fundamentals matter, whether we are talking about an individual company or a broader asset class. Caveat emptor!

Just Another Value Stock???
07.14.26
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Ryan ALM’s TPA+ Approach

By: Russ Kamp, CEO, Ryan ALM, Inc.

Asset allocation discussions have recently compared traditional pension asset allocation with a “new” approach referred to as the Total Portfolio Approach (TPA). We believe the distinction between traditional asset allocation and the total portfolio allocation is subtle but important. The two approaches begin with different questions.

Traditional asset allocation approaches ask: “How should we invest the assets to achieve the required return objective?”

A TPA approach asks: “How does every asset contribute to funding a pension plans liabilities (benefits)?”

In a traditional asset allocation framework the expectation is that long-term returns will eventual fund the promises. However, a pension plan doesn’t exist to outperform an index/benchmark. It exists to pay the promised benefits!

In the TPA approach, a pension fund will have a broadly diversified array of investments, but each investment has a specific purpose relative to the pension plan’s liabilities. There are no investment sleeves, but a single portfolio with the goal to fund the pension’s liabilities.

We, at Ryan ALM, Inc. believe that our approach, implemented over decades, goes one step beyond Total Portfolio Management.

Whereas a TPA asks: “What allocation best maximizes the performance of the entire portfolio?”

Ryan ALM asks: “What investment strategy best minimizes the cost and risk of paying future pension benefits?”

TPA shifts the focus from individual asset classes to the overall portfolio. Ryan ALM shifts the focus again—from the portfolio itself to the pension liabilities. Assets need to know what they are funding… net liabilities (projected benefits – projected contributions). Since the actuary does not calculate net liabilities, this becomes the first step and calculation of the Ryan ALM process. Our philosophy is arguably closer to Total Pension Management than Total Portfolio Management.

Ryan ALM’s liability-based investment philosophy shares important characteristics with TPA while also differing in a fundamental way.

Traditional Asset AllocationTotal Portfolio ApproachRyan ALM Liability-Based Investing
Optimizes asset-class weightsOptimizes the total portfolioOptimizes the funded status and liability outcomes
Benchmark relativeGoal relativeLiability relative
Focus on returnsFocus on total risk-adjusted returnsFocus on securing pension promises
Asset classes drive decisionsPortfolio drives decisionsLiabilities drive decisions

The Pension objective isn’t returns—it’s securing pension promises! Ryan ALM’s pension management is distinguished from both traditional asset allocators and TPA by highlighting and managing to the pension plan’s liabilities, and then paying those liabilities when required through Cash Flow Matching. No games and no uncertainty!

07.13.26
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ARPA Update as of July 10, 2026

By: Russ Kamp, CEO, Ryan ALM, Inc.

Another Monday, another ARPA update. If this legislation wasn’t so important to so many American workers promised a benefit that had a very uncertain future, you’d probably say “enough already”. But we know that DB pension benefits provide retirees with some certainty and contribute to a more dignified retirement.

The ARPA legislation, and the PBGC’s implementation of this critical program, is less than 6-months from its completion. As a result, weekly activity is waning. The previous highlights this trend, as only 1 pension fund received approval of its SFA application. Iron Workers-Laborers Pension Plan of Cumberland, Maryland, will receive $22.7 million for the plan’s 754 participants, as this non-priority group member received approval for its revised SFA application on July 8th.

There was no other apparent activity during the previous week, as no applications were received, denied, or withdrawn. The waitlist still has one non-Mass Withdrawal fund that has yet to submit an application to the PBGC.

There are currently eight applications before the PBGC. Roofers and Slaters Local No. 248 Pension Plan’s application must be acted on by July 18th by the PBGC, or they will automatically receive an SFA grant, currently estimated at $5.1 million.

For pension plans still waiting to receive SFA or for those that have recently received their grant, U.S. rates continue to be near cycle highs, providing pension sponsors with the opportunity to secure those future benefits with greater cost reduction.

Lastly, the PBGC continues to codify its rules regarding permissible investments for the SFA proceeds, which seems surprising given that we are 5-years into the program and their oversight. Ron Ryan and I will provide our thoughts on the latest proposed changes in a separate post.

07.10.26
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Ryan ALM, Inc. – Q2’26 Newsletter

By: Russ Kamp, CEO, Ryan ALM, Inc.

We are pleased to share with you our insights and perspectives on the relationship of pension assets to pension liabilities (benefits and expenses) through the Q2’26 Newsletter. As you will read, the second quarter produced a nice turnaround for pension funding following a challenging Q1, as asset growth far outpaced liability growth. As a result, funded ratios are at a high point since we began our analysis back in 2020.

As always, we encourage you to reach out to us with any questions or observations. Thank you for taking the time to read our insights.

07.08.26
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Complexity Doesn’t Make it Good or Appropriate

By: Russ Kamp, CEO, Ryan ALM, Inc.

We have a serious retirement problem in the U.S. Defined benefit plans have mostly been replaced in the private sector, and rising contribution levels are making public pension offerings problematic for the sponsoring entities. These issues are compounded by the fact that many defined benefit plans have migrated significant assets to opaque, complex, and costly alternative investments. In the process, creating liquidity to meet ongoing benefits and expenses has become more challenging.

Managing a DB pension plan isn’t complicated, yet we continue to make it so. I read an Institutional Investor article with interest, and some alarm, that a public pension system operating with negative cash flow (contributions < benefits and expenses) has decided that the best way to address the liquidity shortfall is to move assets into “”a lot more esoteric lending strategies” like asset-based finance and royalty-based lending in sectors such as entertainment, healthcare, and aircraft engine leasing.” The CIO for this fund continued, “we’re going into a lot of illiquid structures, so we structure the portfolio to make sure we have enough liquidity to meet our benefit payments at all times,” Really????

Going into illiquid structures to ensure adequate liquidity seems oxymoronic. We’ve seen what has transpired in both private equity and private debt regarding distributions and the lack thereof. Again, our industry often brings complexity to a problem when there are far simpler ways to tackle an issue. For decades, Cash Flow Matching (CFM) has carefully matched asset cash flows of bond interest and principal with the liability cash flows of benefits and expenses (B&E) chronologically. There is no hoping that the liquidity will be available when needed.

U.S. rates are currently at levels providing plan sponsors with the ability to SECURE future B&E at low cost and with certainty barring any defaults in IG bonds (<0.2%/year for the last 40-years). Why engage in expensive, opaque “solutions” when a CFM strategy can be adopted for pennies on the $. CFM is a-sleep-well-at-night strategy, which will be comforting to not only the plan sponsor but the plan’s participants. Please stop thinking that a solution needs to be complex to be good. Some of the very best approaches are transparent, straight-forward, and inexpensive: like CFM!

07.06.26
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It’s The Wrong Benchmark!

By: Russ Kamp, CEO, Ryan ALM, Inc.

Mark Stricherz has penned an article for The Center Square discussing the Pennsylvania Public-School Employees’ pension fund and its $41 billion shortfall. The gist of article centered on the fact that PSERS failed to exceed it’s investment benchmark last years which fund officials blamed on private equity.

A bit of background: As of Dec. 31, PSERS held $85.3 billion in assets, including $10.1 billion in private equity. Long-term return expectations for this asset class were an annual 10.06% return. The precision of the return expectation seems a bit silly and quite modest given the asset class’s poor transparency, lack of liquidity, and excessive fees. As a point of comparison, the S&P 500 returned 11.4% for the 20-years through June 30, 2026. Regrettably, PSERS’ PE funds produced only a 2.59% last year. As ugly as that return is, that is NOT the reason that PSERS is $41 billion in the whole and Pennsylvania taxpayers on the hook.

An investigation by The Center Square found that private equity was the only one of PSERS’ eight asset classes to miss its benchmarks over one-, three-, five-, 10- and 15-year periods. Interesting! I find it hard to believe that the fund had this kind of relative outperformance and yet still must deal with a $41 billion shortfall. Again, I don’t believe that PE is the sole cause.

As I’ve been reporting for years, the primary objective in managing a defined benefit plan is NOT one focused on return (the ROA). It is the SECURING of the promised benefits at a reasonable cost and with prudent risk. It is a LIABILITY objective. It doesn’t matter that a plan’s assets outperform their respective asset class objectives if the plan’s total fund fails to exceed liability growth. Presently, there are roughly 500,000 members and beneficiaries counting on those promised benefits.

A successful DB pension plan understands its commitments. You’ve made a promise: measure it – monitor it – manage it – and SECURE it! Focusing on return only guarantees volatility. Volatility of returns, contributions, and funded status. Get off the performance rollercoaster.


07.06.26
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ARPA Update as of July 2, 2026

By: Russ Kamp, CEO, Ryan ALM, Inc.

Whether you celebrated America’s independence on July 2nd or 4th, we hope that you had a wonderful weekend celebrating 250-years with family and friends.

Regarding the PBGC’s implementation of ARPA’s pension legislation, we can report that Albany-based Iron Workers Local No. 12 Pension Fund, a non-priority SFA candidate, will receive $4.7 million in SFA for its 659 members following approval by the PBGC of the revised application.

In other news, the 90 members of the PMPS-ILA Pension Plan and Trust are hoping that the revised application will soon be approved providing the fund with $769k in SFA.

Pleased to report that there were no funds denied the ability to submit an application and no applications before the PBGC were withdrawn. However, Plasterers Local 79 Pension Plan still remains the only non-Mass Withdrawal waitlist candidate to not submit an application at this time.

U.S. interest rates remain at attractive levels providing plan sponsors with the opportunity to significantly reduce the cost of future pension promises, while securing monthly liquidity needs. We would welcome the opportunity to produce a free cash flow analysis on what your fund’s projected SFA could potentially do for your fund.