In the latest ARPA news, New York State Teamsters Conference Pension and Retirement Fund (Syracuse, NY) with >33,000 participants is the third MPRA pension suspension plan to file an application with the PBGC for the SFA. The estimated payout is slightly greater than $1 billion making it the third-largest anticipated federal grant that has been filed so far. Of the five applications that have been approved, we still only have two that have received payments. As a reminder, the PBGC has 120 days to either accept the application as is or reject the application requiring an amended filing, which starts the review clock all over.
There are still 19 Priority Group One applicants waiting to hear about their plan’s filing. In addition, there are 5 Priority Group Two plans that have yet to hear, and many more within this cohort that have yet to file. In total, it is estimated that more than 200 plans will be eligible to seek federal support through ARPA. Now, if we can only get the “Final Final Rules” on how to invest the grant money we’ll be firing on all cylinders.
No final rule, backup on the route 47, what happened? Maybe Friday will produce a massive list of approvals and new applications. I keep hearing investment reports. Who knows.
Hi Ray – What do you mean by “I keep hearing investment reports”? Why Friday? Is the 11th your lucky day? All the best, Russ
Western Pa Pension Fund says they are awaiting investment reports to finalize their application, so they won’t have to reapply. 4 are outstanding. As far as Friday, that seems to be the only day Pbgc updates it’s status of applications portion of the website. I guess the 12 remaining group 2 funds must be waiting on same information.
Gotcha – Now I understand. Given January’s poor equity performance, the MV of assets will be overstated through 12/31/21. They’d be better off waiting on January’s data, which the custodian should have by now.
Are there investors in pensions? Do these investors make money off our pensions?
Good morning, Ray – I thought that my response went through, but I’m not seeing it now. Sorry. Are there investors? Yes, the plan participant who is contributing a portion of their compensation with the expectation that the promised benefit will be there when they retire. There are no other investors, as employers are not able to recapture any “excess” assets from this plan. There are many outside vendors/service providers that feed on these pensions, such as attorneys, actuaries, consultants, custodians, and investment managers (many,many investment managers). They charge fees for their services and in some cases, very large fees (PE and HFs). These vendors often engage in activities that are self preservation and not necessarily in the best interest of the plan or participant – I know that you’ll be shocked by that claim!
Good morning, Ray – PBGC provided an update yesterday on their website, but it doesn’t look like any new applications were filed, no plans received approval, and no SFA funds were paid. Just another day in sleepy DC.
Good morning, Ray. I hope that you are well today. Are there investors? No. There are many service providers – attorneys, accountants, actuaries, asset consultants, custodians, and investment managers (many investment managers) that charge fees to provide services to your plan and all plans within the pension world. The level of fees will vary based on the size of the plan’s assets and asset allocation. Plans that primarily invest in plain vanilla equity and bond programs and use passive investments will have lower fee schedules than those that invest in active management and use alternative investments, such as private equity, private debt, real estate, infrastructure, etc. There are many businesses that benefit from defined benefit plans remaining in existence. Also, not all decisions are based on the best interest of the plan or their participants. I’m sure that last statement doesn’t shock you! Russ
701 applied on 2-7-22. 466 withdrew their application a few days before they were to be approved. The process is muddled. Would be nice to know the revised application process. Multiple revised applications are sitting on the runway. At this point, it’s hard to figure Pbgc process. One good thing, 707 is transparent about their intentions.
Hi Ray – I hope that you are well today. It certainly is a muddled process! I don’t have any more insight into the process than you do. I sit at my desk each morning hoping to see a bit of progress, but we’ve witnessed very little at this point. Bottom line: We will get through this process. Those plans filing for the SFA will benefit from the grant $ whether it accomplishes the original objective or not. Participants that got hosed under MPRA should be made whole. It isn’t great, but it is certainly better than nothing. Like you, I just wish that the process was a bit more expedited, especially for the participants who did suffer an economic setback under MPRA. Stay well, Russ
I think the pain could be eased if these funds would just restore benefits now.
Couldn’t agree more. None of the applications have been rejected, although many have been revised. The SFA received has been above the requested amount. I would say that there is a high probability that what is asked for will be received. Knowing that trend exists should provide comfort to the plan’s trustees to reinstate benefits. Given how unfair this process has been to the participants that were cut, one would think that a swift correction would be forthcoming.