An ARPA Update

I hope that you had a great weekend. I can’t believe that February has already come and gone (effective today). Here’s the weekly update related to ARPA application filings, approvals, and payments. This is going to be a fairly simple update, as we haven’t had a new application filed since February 7th (Mid-Jersey Trucking Industry and Teamsters Local 701 Pension and Annuity Fund). We have had five applications approved (four of them with their initial filing) and each of those five Group 1 Priority plans have been paid their SFA as of February 18th. Here is a list of those plans:

Local 138 Pension Trust Fund
Idaho Signatory Employers-Laborers Pension Plan
Bricklayers and Allied Craftworkers Local 5 New York Retirement Fund Pension Plan
Road Carriers Local 707 Pension Plan
Local 408 International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America Pension Plan

The total dispersed so far is $1.1 billion, which continues to be a small drop in the bucket given that the estimated cost of the legislation is roughly $95 billion. Furthermore, the pace of filings among Group 2 Priority funds continues to be quite slow with only 7 plans having filed since becoming eligible in late December 2021. Within Group 2 we have 4 MPRA Suspension and Partition plans that have been filed and 3 identified as Critical and Declining.

Lastly, we have yet to get the Final, Final Rules from the PBGC on how this legislation should be implemented. Any talk/action related to expanding the list of eligible investments beyond the current investment-grade bonds limitation is inappropriate for the funding objective, especially when one notes the incredible volatility in markets to begin this year. If the legislation truly desires the ensuring of benefits (and expenses) for as long out as possible, allowing more volatile investments in the SFA bucket is a risky contradiction! Use the legacy assets to enhance returns but keep the SFA assets matched against liability cash flows to maximize the security of benefit payments. As it is, the goal of securing the promised benefits for 30 years is a pipe dream. Don’t shorten or endanger what is already a modest period of time.

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