By: Russ Kamp, Managing Director, Ryan ALM, Inc.
The flood gates have been opened! From May 3rd to August 5th there had been 10 applications filed for Special Financial Assistance (SFA). During the week ending 8/12, 12 applications were submitted. The activity has been almost exclusively driven by the PBGC’s issuance of the legislation’s Final, Final Rules, as 11 applications were classified as supplemental. The only non-supplemental filing was the Central States, Southeast & Southwest Areas Pension Plan (a.k.a. 800-pound gorilla). The Central States plan withdrew the initial application that had been filed on April 28th and resubmitted an updated application on August 12th. As a reminder, this plan is seeking nearly $35 billion in SFA support for the 364,908 plan participants. To put that sum into perspective, the Central States’ request is nearly 5 times greater than the $7.5 billion that has been paid out to date to the 29 applications that have been approved.
Only the Central States plan withdrew an application last week. In addition, there were no applications that were either denied or approved. The PBGC has 120 days to act on the supplemental applications but given the fact that these entities have already received SFA from the previous submissions, it doesn’t seem likely that 120 days will be necessary for an adjustment to the original SFA to be approved and paid.
No new applications have been filed since June 30, 2022, despite the fact that Priority Group 4 plans (those projected to become insolvent before 3/11/2023) have been able to file since July 1st. To date, 41 plans have submitted applications to receive SFA. When Ron and I were involved in the Butch Lewis Act effort, Cheiron had produced an excellent analysis of 114 plans. I’ve read on numerous occasions that perhaps as many as 200 pension plans might be eligible to participate in the ARPA legislation. If that is the case, we’ve only seen about 20% of the applications filed or <50% if the number of eligible plans is closer to Cheiron’s initial study. Obviously, there is more to come. Stay tuned!