ARPA Update as of September 3, 2022

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

Despite the unofficial end of Summer (boy, that seemed fast), the PBGC was engaged in ARPA activity as we closed out August and gathered together to celebrate another Labor Day Weekend. We hope that yours was enjoyable and safe.

With regard to last week’s action, the Toledo Roofers Local No. 134 Pension Plan has joined the action by filing its initial application with the PBGC seeking Special Financial assistance (SFA). This Priority Group 2 plan (MPRA Suspension) is seeking $18.8 million for its 431 participants. As a reminder, the PBGC has 120 days in which to approve this application.

In other action, Gastronomical Workers Union Local 610 and Metropolitan Hotel Association Pension Fund were served a tasty morsel by the PBGC as its SFA application was approved. They have been awarded a grant of $31.1 million for the plan’s 2,624 participants. While the sponsors at Gastronomical Workers were devouring that news, we learned that Bricklayers Union Local No. 1 Pension Fund of Virginia had withdrawn its initial application. This Group 1 priority plan likely pulled the application given the updated rules provided by the PBGC last month. We’ll see what a refiling might mean in terms of additional SFA assets. The initial application was seeking an SFA grant of nearly $8.7 million to help support the plan’s 395 participants.

On the investing front, equities had a difficult week to end August continuing a challenging pattern that has been witnessed throughout 2022, while US interest rates continued to climb. Both of those developments would negatively impact the value of the SFA grant assets that weren’t defeased to meet benefits and expenses. September has historically been the most challenging investment month for equities. Let’s hope that history doesn’t repeat itself.

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