Not This Week

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.

20 thoughts on “Not This Week

  1. It seems most of these funds are shooting for February to apply. Somehow Congress or Pbgc has to get off this 120 day mandate. 4 months to look at an application, and there’s only 40 applications to look at.

  2. Hi Ray – I can only imagine how frustrating these delays are for you and your fellow participants. I can’t imagine why it takes so long to review an application, but the PBGC might be capacity-constrained. I don’t know what percentage of their staff has been allocated to this review relative to their other responsibilities. They created priority groups to spread the workload around, but the number of revised applications is certainly creating a logjam comparable to our supply jam! Stay well, Russ

  3. 560 withdrew their application on 1-11-22, 10 days before their approval on 1-21-22. One positive, 138 was approved on 12-21-21, the funds were deposited 1-14-22, about 23 days.

  4. The fact is that despite the misinformation presented to retirees.I hesitate to use the word lies,that if they supported this free bailout of Union funds they would be made whole this was NEVER a guarantee. For those cut by MPRA the FACT has always been that if the Unions do not get their own way they could decide to not apply and keep the MPRA cuts.We have funds that have put that scenario in writing long ago.Since MPRA was not removed as an option if they do not get their own way the Unions may indeed not apply at all and move forward with new cuts using MPRA. We are seeing the Unions crying to the PBGC and fighting any restrictions and accountability as they have always done with their umbrella group the NCCMP. We see them also getting political ally’s like Schumer to go after the PBGC and cry for them.

    Its a shame that so many retirees have been mislead and told that IF the taxpayer is put on the hook for looted and mismanaged Union pension funds for 30 years to the tune of 100 billion retirees would be made whole automatically..Retirees actually believed this was a bailout of retirees and not the Unions.

    Let me ask once again.How will the PBGC rules impact those Union funds who have already created composite plans by freezing the existing Defined Benefit Fund and creating and going forward a variable pension fund such as the model created for the Carpenters Union by Milliman?? I guess we did not need that pesky Grow Act after all.Also.When and if the Central States fund applies will the PBGC look at the damage to the fund Hoffa and Teamsters did and continue to do with the hybrid pool created in 2012 they are using as an organizing tool??

    • Good morning, Richard. I had to drive my daughter back to Baltimore for school. Haven’t been able to focus on the latest comments. I’ll try to respond, but I don’t know about a lot of your points.

    • Hi Richard – You raise a good point about the pension systems having to file for the SFA in order for previously cut benefits to be reinstated. I suspect (certainly don’t know for a fact) that legislators presumed that funds made available (grants) would be used. It is truly unfortunate that there is a major disconnect between the intent of the legislation (secure 30-years of benefits) and the implementation of the Bill, which likely secures far fewer years. I will not comment on the other stuff you brought forward as I don’t have any insights to share. Have a good day, Russ

  5. Hey Russ.Did my previous post vanish??

    • See my comment about driving my daughter back to Baltimore for school. Have a good day.

      • I’m beginning to believe pension funds would be better off being run by the government, at least they would communicate with the masses.

      • I’m not sure that would improve the current state of communication or lack thereof. Your fund’s reps should be communicating with you along each step of the process.

  6. Until funds apply, and regain their ability to communicate with the the people they work for, I think we will be reduced to speculation about whether they will or won’t apply for free money. How a group of 4-6 people can make decisions for thousands is beyond me. This is the retirees money, gained through their blood sweat and tears.

    • Good morning, Ray. It must be incredibly frustrating for you and your fellow plan participants. I agree that communication is key in this process. I don’t see a lot of that though! I hope that you have a great day. Russ

  7. 707 was approved, a biggie.

  8. Willie Nelson, On The Road Again. Boy, Pbgc website has been hopping in the last 2 days.

  9. It is nice to be on the road again and meeting with members of the pension community.

  10. It’s almost the end of January, where’s the final rule? Could it be most funds have been briefed as to final rule, just look at December applications. It would be ludicrous to re-re vise a application.

    • Good morning, Ray. I doubt that funds have been “tipped” off. The OMB must see the updated rules and that hasn’t happened yet. Given the fact that applications have been approved and money has been sent (one case) indicates to me that the amended guidelines, if any, won’t be significant. I hope that you have a great day. Russ

  11. Good morning, Ray. I hope that you are doing well today. I doubt that any fund has been tipped off as to the Final, Final Rules. According to my source who was part of the bill writing team, the rules will not be published until the OMB sees them first. An OMB review is just standard procedure. I agree with you that it doesn’t make sense to approve applications and send money only to have the rules revised. That said, perhaps that is all we need to know. Given the current action, we shouldn’t expect a dramatic revision. I hope that you have a great day. Russ

  12. NYS pension fund is supposed to file their application Friday, somebody at Pbgc has to be giving the go ahead, it just doesn’t make sense to fill out hundreds of pages only to be told you got something wrong. I wonder if group 2 applications are easier?

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