I had been hearing rumors, as I’m sure that many of you were too, that the PBGC was going to present their “Final, Final Rules” as it relates to the ARPA implementation this week. We have been waiting roughly six months since they informed us of their “Interim, Final Rules” last July. Well, it is Friday, and it doesn’t look like we are going to get any update today, especially since the Office of Management and Budget (OMB) has not been provided with an update for their review. According to someone who I absolutely trust, an OMB review is a standard part of the rulemaking process. The updated guidance will not be released to the public until the OMB has reviewed those changes if any.
As we know, the Special Financial Assistance (SFA) grant has been approved for two plans to date. Another two dozen or so are in the queue, with many plans having had to submit revised applications. Most pension plans that used MPRA legislation to previously cut benefits have not filed an application for the SFA as of yet despite being eligible to do so since January 1st. Perhaps they are just waiting for these “final” rules to be published. Let’s hope that is the case.
Anyway, I’m not expecting a major update to this legislation. There may be some tinkering with the eligible list of investments for the SFA segregated assets, but that won’t dramatically improve this legislation. It will do more to destabilize the grant money’s original goal to “secure” benefits for as far out as possible. It is unlikely that the current discount rate will be reworked, as a change there could result in a substantial increase in the cost of the legislation, which is currently estimated at roughly $90-$95 billion. I do know that the legislation called for as simple a process as possible to file and receive grant money. Six months into this process and I think that it is safe to say that goal hasn’t been accomplished.