ARPA Update as of May 13, 2022

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

Following a flurry of activity during the previous three weeks, the PBGC and Special Financial Assistance (SFA) candidates took a well-deserved breather, as no new applications were either filed or approved. In addition, none of the 13 approved plans waiting to receive the SFA received those payments last week. There remain 12 applications still to be approved, including Priority Group 3 member the Central States, Southeast & Southwest Areas Pension Plan that covers nearly 365,000 plan participants. To date, nearly $6.5 billion in SFA has been approved and just over $2 billion awarded. Those sums will look quite paltry once the Central States plan gets its approval, as they have filed for a grant in excess of $35 billion.

Perhaps this will be the week that we get the Final, Final Rules from the PBGC. While we’ve waited for the final implementation criteria, we have seen US interest rates rise substantially. The good news: the cost to defease (and secure) the promised benefits has fallen allowing for potentially more benefits to be paid from the SFA grants and for longer. This is one of the few benefits of a rising interest rate environment.

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