09.24.26
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This is Embarrassing!

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

The United States has by far the deepest capital markets in the world, an enormous asset-management industry that has made many participants quite wealthy, and trillions of $s in retirement assets. Yet we rank only 24th of 44 countries for retirement security based on the results from the Natixis Investment Managers’ 2026 Global Retirement index. I find that result embarrassing and you should, too.

The countries ahead of us aren’t necessarily better investors. Many have simply done a better job of making retirement saving broad-based, automatic, and oriented toward producing sustainable retirement income. In addition, they’ve simultaneously reduced risks related to healthcare and longevity that Americans are asked to manage mostly through a defined contribution structure. As regular readers of this blog know, I remain a fan of 401(k)-type plans if they are supplemental to a DB pension offering, but unfortunately, that is rarely the case these days. Again, asking an individual to fund, manage, and then disburse a “retirement” benefit with little to no disposable income, investment acumen, or a crystal ball is just silly.

So why are we so poorly ranked? According to the survey, in which we were once ranked 14th just a decade ago, the U.S. is facing mounting pressures on its traditional “three-pillar” retirement model of government benefits, employer-sponsored plans, and personal savings, as a result of us living longer, DB pension plans going away, and a Social Security trust fund that is projected to be depleted by 2032.

The U.S. score of only 68% looks dismal when compared to Norway’s 83%, which claimed the No. 1 spot from the 44 developed countries included in the survey. Ireland was second with 81%, and the Netherlands came in third with a score of 79%. What do they do better than us? First, the survey isn’t just about retirement security. Natixis evaluates 18 indicators across four broad categories:

Finances in Retirement — inflation, interest rates, tax pressure, government indebtedness, old-age dependency and the strength of the financial system.

Material Wellbeing — income per capita, unemployment and income equality.

Health — life expectancy, healthcare spending and insured health expenditures.

Quality of Life — happiness, environmental conditions, biodiversity and related measures.

So, a country may have a decent, or even good, retirement system but still rank poorly because healthcare, inequality, inflation or government finances create retirement insecurity. Furthermore, most countries ranking ahead of us don’t leave retirement to chance or the individual. The other countries get virtually everyone into a retirement system making savings largely automatic and they make contributions sufficient to produce meaningful retirement income not focused on the size of one’s account “balance”.

Unfortunately, our model since the mid-80s been much more dependent upon individual decisions. An employee has to first work for an employer offering a plan, become eligible, elect to participate, contribute enough, select investments appropriately, avoid withdrawing the money, continue saving after changing jobs, and eventually determine how to convert an accumulated balance into lifetime retirement income. Again, not an exercise designed for the average American worker!

Furthermore, we’ve heaped huge financial burdens on our citizens related to housing, healthcare, education, childcare, insurance, food, energy, utilities, etc. that financing a retirement is nearly a pipe-dream. Not only do we need to once again offer a retirement vehicle that isn’t dependent on the individual for funding, but we need for the U.S. to make living in this country affordable for the masses. Why is it that we spend more $ on healthcare than any other nation yet rank so poorly (only 25th/44) in the survey.

Despite the move from DB to DC offerings, retirement-plan coverage remains an issue. Natixis cites Pew research which estimates that more than 56 million private-sector American workers lack access to a workplace retirement plan. That is a sorrowful statistic. I’ve spent most of my 45-years in the retirement industry focused on protecting and preserving defined benefit plans. I was thrilled to join Ron Ryan and Ryan ALM in 2019 given their similar mission. We need others in our industry to join the fight. Are you ready?

09.23.26
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It’s Flattening!

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

Have you noticed the Treasury yield curve recently? There’s a great flattening occurring and it is quite beneficial for cash flow matching (CFM) assignments in the 1- to 10-year range. Bond math tells us that the longer the maturity and the higher the yield, the greater the cost reduction when securing future benefits. Our CFM strategy reduces the cost of future benefits by roughly 2% per year or >20% over 10-years. However, most of our clients have asked us to secure only the next 10-years, so capturing longer maturity is somewhat constrained, as we will not own bonds outside the range that we are covering. So the higher yields are quite beneficial. Can you imagine reducing future benefit costs by more than 40% for assignments stretching 20-years or longer?

Despite the fact that the Fed has only raised rates once since 2023, market participants have been demanding higher yields to compensate for the greater inflation and uncertainty. As a result, Treasury yields have elevated during the prior 12-months.

Graph provided by the WSJ

As the information below highlights (rates as of 10:29 am EST) greatest move up in rates has occurred in the 2-year to 5-year segment of the curve. In fact, the 2-year yield is at its highest in 27-years.

Treasury yields in the 2- to 5-year maturities are closing in on 5% levels. Should inflation persist and the Fed once again raise rates, it is not unreasonable to believe that 5% levels will be breeched providing plan sponsors of defined benefit plans with a wonderful opportunity to de-risk a portion of their plans for the next 10-years. That coverage extends the investing horizon for the residual assets of the plan and dramatically enhancing the probability that those strategies achieve the desired performance goals.

As always, we are pleased to provide a free analysis for any plan sponsor who would like to understand the impact that cash flow matching can have on your pension plan. Like Mikie, if you try us, you’ll like us!

09.22.26
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Negative Cash Flow

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

Negative cash flow occurs when a defined benefit pension plan pays out more in benefits and expenses than it receives in contributions. Don’t panic if your DB plan is experiencing this phenomenon, as negative cash flow is often a perfectly natural consequence of pension-plan maturity. In fact, as a defined benefit plan ages, you would generally expect its cash-flow profile to move in that direction. The issue isn’t the fact that the pension plan is experiencing negative cash flow, the potential problem is how the negative cash flow (liquidity) is financed.

I’ll be addressing this topic at both the FPPTA (9/29 in Orlando) and the IFEBP (10/26 in New Orleans). According to the Public Plans Data (publicplansdata.org), which has robust information on roughly 250 public pension plans covering about 95% of the public assets, 87.2% of the plans are currently in negative cash flow. There are many ways that pension plans are funding monthly benefits and expenses, including:

Liquidity strategyHow it works
1. Cash / money-market reserveMaintain cash, STIFs or money-market funds for near-term benefit payments
2. Contributions + investment incomeEmployer/employee contributions, dividends, and bond coupons fund benefits
3. Fixed-income liquidity sleeveBonds serve as both investment allocation and source of liquidity
4. Rebalancing to fund benefitsSell overweight asset classes and use proceeds for benefit payments
5. Public-market liquidationSell stocks, bonds, ETFs, or other liquid assets as cash is needed
6. Distribution harvestingUse dividends, interest, real estate/private-market capital distributions
7. Cash-flow matching / bond laddersBond coupons and maturities are deliberately aligned with projected benefits

The strategies above highlight two fundamentally different philosophies. The first category are the Asset-driven liquidity group whose practitioners believe that when they need liquidity, they can get it. They are the “When we need cash, where can we get it?” crowd. The strategies that fall under that philosophy include items 1-6 in the above matrix.

The second category is the Liability-driven liquidity cohort, whose supporters claim that “they know when benefits must be paid, so why don’t we arrange the assets today to produce the cash when those payments occur?”. This category includes the Cash Flow Matching and Bond Ladder folks.

The latter strategy is what Ryan ALM espouses for plans with negative cash flow. If you’d like to learn why or to receive a copy of my presentation, don’t hesitate to either reply to this post or email me at rkamp@ryanalm.com, and I’ll be happy to share it with you.

09.21.26
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ARPA Update as of September 18, 2026

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

Welcome to the first week of Fall. It has always been my favorite season, but given how my football team has played during the last decade, that was putting a damper on this beautiful time of year in New Jersey. I’m hoping that the Giants can turn around the franchise’s recent poor performance and make Autumn wonderful again.

Regarding ARPA, there wasn’t much happening last week above the surface. There were two additional applications received – both falling under the Mass Withdrawal category and as plans located in the Second Circuit. There are currently 39 pension plans with applications before the PBGC seeking Special Financial Assistance. If successful, these 30 plans will be awarded >$1.64 billion in SFA for 71,151 plan participants.

There weren’t any plans receiving approval for SFA, but there also weren’t any plans that had applications rejected or withdrawn. It isn’t surprising that there weren’t any fund’s added to the waitlist, as we are late in the implementation of this important pension legislation.

Currently, there are 20 applications in review by the PBGC that fall under the Mass Withdrawal status, including 19 from the Second Circuit. It will be interesting to see if any non-Second Circuit plans beside California Winery Workers’ Pension Plan are given an opportunity to submit an application.

09.18.26
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I Guess That Other’s Were Confused, Too.

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

Seems like yesterday’s strong bond rally has already been forgotten, as Treasury yields retrace most of yesterday’s move. As mentioned in my post yesterday, fighting a supply-side oil shock with monetary policy tools doesn’t do anything to improve the supply or delivery of this precious commodity. Tamping consumer demand through higher interest rates may eventually reduce demand for oil, but how soon? We’ll continue to monitor the Fed’s progress as rising oil prices, higher inflation, and increasing rates have potential major implications for defined benefit pension plans. Stay tuned!

Table from the WSJ at 12:05 pm

Will the 25 bps Increase Tackle a Supply Shock Inflation?
09.17.26
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Will the 25 bps Increase Tackle a Supply Shock Inflation?

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

I’m a touch confused by today’s market activity. The significant rally in both bonds and equities seems a bit of an overreaction to yesterday’s Fed action in which they raised the Fed Funds Rate 0.25% to 3.75%-4.0%. It was the first increase in the FFR since 2023.

Using monetary policy against a supply-driven inflation shock may eventually reduce aggregate demand, but it cannot produce another barrel of oil, reopen a closed shipping route, increase refining capacity, or lower the physical cost of moving goods. It can’t do any of that!

The Fed indicated that inflation remains elevated and that the increase should support a “timelier return” to 2% annual inflation. Yet the current inflation problem is energy focused. August’s headline CPI was 3.4%, with gasoline prices jumping 3.9%. WTI oil is still priced above $100, diesel remains near record levels, jet fuel’s price is roughly double February levels, and natural gas prices remain sharply higher. These issues are unlikely to be addressed through a modest increase in short-term rates.

The Fed believes that changes in the FFR will affect other interest rates, potentially influencing household and business spending and ultimately economic activity. However, raising short-term rates doesn’t address the current shortfall in oil supplies. A trucking company isn’t likely to respond to a 25-bp hike by delivering 5% fewer groceries. Farmers don’t decide NOT to harvest corn because overnight rates increased. Airlines, utilities, manufacturers, and logistics companies continue consuming energy because much of their demand is relatively inelastic in the short run.

Since the Fed can’t directly increase oil supplies, will its attempt to reduce demand elsewhere prevent the oil shock from becoming imbedded inflation? Only time will tell. But how much time? Today’s market action says to me that investors believe that inflation has already been conquered. I’m not so sure.

09.15.26
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It Hasn’t Gotten Any Better

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

On April 1, 2026, I produced the post below. It wasn’t an April Fool’s Joke then and it hasn’t gotten any funnier since!

I stated that “the greatest risk managing bonds is interest rate risk. Given both geopolitical (Iran, Taiwan, Ukraine) and economic risks (oil, inflation, interest rates), now is the time to significantly reduce risk within your fund, whether that be a DB pension or E&F.” I added, “Why continue to ride active fixed income through these uncertain markets? One can use a cash flow matching (CFM) strategy to SECURE and fund net liabilities chronologically well into the future. In the process, interest rate risk is eliminated as future benefits and expenses are not interest rate sensitive.”

Well, we are almost 6 months removed from that post, and U.S. oil prices continue to rise, inflation continues to be sticky, and interest rates have been soaring with the yield on the U.S. 10-year Treasury note up another 70 bps since 3/31/26. As a result, active core fixed income managers continue to struggle.

As rates continue to rise, they are more likely to destabilize other markets, including U.S. equities. Is your fund prepared for this potential outcome? Bring some certainty to the management of your pension plan or E&F. Convert your “active” core fixed income to a cash flow matching (CFM) mandate. In the process you will SECURE the promised benefits, extend the investing horizon for the residual return-seeking assets, and improve the liquidity needed to meet the monthly obligations.

Please don’t wait another six months. Your funded status may bear the consequences of inaction.

on

March Proves Challenging for Core Fixed Income
March Proves Challenging for Core Fixed Income
09.14.26
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ARPA Update as of September 11, 2026

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

It is a joyful September Monday morning for long-suffering Giants fans. After opening the football season against the Cowboys with a loss in nine previous opening night games, including 1986 when they won the Super Bowl, last night’s 28-20 victory was so SWEET! I’d like to continue writing about this game, but I should get to the task at hand.

Regarding ARPA, the PBGC is not reviewing 37 applications for Special Financial Assistance (SFA), including 18 funds that were casualties of mass withdrawal prior to 2020.

During the prior week, Local 108 Retirement Plan, a Maplewood, NJ, based plan, submitted a revised application, while the Employee Pension Benefit Plan of Local 640 I.A.T.S.E. from Brooklyn, NY, submitted an initial application. Together they are seeking $7.7 million in SFA for their 1,182 plan participants.

There’s little to report beyond the couple of submissions, as there were no applications approved, denied, or withdrawn. Furthermore, there were no funds seeking to be added to the waitlist.

Last week I produced a blog post that highlighted an analysis that we’d completed for a large DB pension plan. The output showed that we could build an investment grade corporate bond portfolio with a YTW of 6.09%. Just imagine how comforting it is to have the ability to secure promised pension benefits with near certainty. The cost to defease future benefits was reduced by 70.5%! Future recipients could potentially benefit greatly from the rising U.S. interest rates. Give us the opportunity to produce a free analysis for you.

09.11.26
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Milliman: Corporate Pension Funding Inches Higher

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

The monthly Milliman 100 Pension Funding Index (PFI) was recently released. As a reminder, the PFI analyzes the 100 largest U.S. corporate pension plans. According to Milliman, overall pension funding improved by $3 billion which included $5 billion in asset growth offset by $2 billion in liabilities as the discount rate fell by 2 bps.

Milliman 100 plan asset value increase was driven by August’s 0.92% investment return. Those 100 corporate plans now have aggregate assets of $1.299 trillion as of August 31. As mentioned earlier, that growth in assets was partially offset by a $2 billion increase in pension liabilities, resulting from a two-basis-point decrease in the monthly discount rate, which is now 6.00% at the end of August.

The Milliman 100 projected benefit obligation was $1.158 trillion as of the end of last month. 

“Despite the slight uptick in liabilities, August’s funded ratio is 112.2% — which continues to be a 25-year high for these plans,” said Zorast Wadia, author of the Milliman PFI. “Well-funded corporate sponsors should be examining ALM strategies and cash balance plan options.” We couldn’t agree more, Zorast! As I wrote yesterday in my pension alert post, U.S. interest rates continue to rise providing pension plan sponsors with a wonderful opportunity to SECURE the benefit promises at significant cost savings, while stabilizing both the funded status and contribution expenses. So much improvement has been made within DB pension plans. It would be shameful to let this opportunity go by without taking advantage.

View this month’s complete Pension Funding Index.

View Milliman’s full range of annual Pension Funding Studies.

09.10.26
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Pension Alert: 6.09%!

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

We just completed an analysis for a DB pension plan in which we were able to defease the fund’s liabilities for 30-years at a YTW of 6.09%. That is an incredible yield, especially given the fact that the YTW is basically what a pension plan will earn over the life of the cash flow matching (CFM) program. While core fixed income strategies are highly interest rate sensitive, defeasing pension liability cash flows (benefits and expenses) with asset cash flows of bond interest and principal eliminates interest rate risk, as future benefits are not interest rate sensitive.

The more extraordinary aspect of this analysis is the fact that the cost to fund FV benefits (and expenses) will be reduced by 70.5% versus the present value of assets needed to fund those liabilities, if the 30-year assignment is fully implemented. You read that correctly: there is a 70.5% reduction in the cost to fund those future value benefits given today’s interest rate environment.

Are you thinking that we must be injecting significant risk into the bond portfolio in order to achieve that level of interest? Well, the average quality rating on our 100% investment grade corporate bond portfolio is an A-. Furthermore, we have as an internal risk control prohibiting purchasing bonds rated below BBB+.

The rates below are from the WSJ as of 9:52 am on 9/10/26

We don’t know where U.S. interest rates are headed, but the beauty in building CFM portfolios is the fact that we don’t need to forecast rates. Once the asset cash flows are matched against the liabilities, the relationship is maintained whether rates rise or fall.

Few pension plans took advantage of the last de-risking opportunity back in 2020. Please don’t waste this chance to SECURE the promises made to your participants, while protecting the plan’s funded status and contribution requirements.