By: Russ Kamp, Managing Director, Ryan ALM, Inc.
Last week didn’t bring much excitement as it relates to the ARPA legislation for multiemployer pension plans. But it was pretty exciting if you are a NY Giants football fan, as I have been since the mid-’60s. Two wins in a span of 8 days to start a season hasn’t been an easy feat for my beloved Giants. But I’ve digressed – sorry! With regard to ARPA, this was the week that wasn’t. There were no new applications submitted, previously submitted applications approved or denied, and the one approved application still waiting for payment continues to wait.
To date, 39 funds have filed applications seeking Special Financial Assistance (SFA). Of the 30 that have been approved, 19 have filed a supplemental application seeking additional SFA as a result of the amended PBGC guidelines. There are currently 28 applications in the “review” queue awaiting PBGC approval of which 9 have not received any SFA from the PBGC at this time. What is interesting to me is the fact that there were 114 plans identified by Cheiron as potential candidates during the development of the Butch Lewis Act (BLA). Those Critical and Declining plans at the time were approximately 10% of the universe of multiemployer pension plans.
The PBGC’s oversight of the ARPA legislation has been ongoing for about 14 months at this time. I would have expected more plans to have filed an initial application. The 39 applications represent only 34% of the initial list of candidates. The PBGC still has two priority groups (5 and 6) that aren’t eligible to file an application until 2/11/23. In addition, there may be other plans that will be eligible after Priority 6 plans have filed. Furthermore, 2022’s market action may drive some plans into a more difficult funded status. We’ll monitor that situation as we move through this rate cycle.