ARPA Update for October 7, 2022

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

I have to admit that I almost forgot to provide an update on the ARPA activity. One quasi-day off and I’m thrown for a loop! Despite my failure to provide an update yesterday, there is some activity to discuss. Three pension plans filed applications last week, including U.T.W.A. – N.J. Union – Employer Pension Plan, the Milk Industry Office Employees Pension Trust Fund, and Local 584 Pension Trust Fund. These three mid-Atlantic funds filed either a supplemental or revised application (U.T.W.A.).

In the case of U.T.W.A, this Priority Group 2 applicant filed a revised application seeking just over $8 million in SFA to cover the promised benefits for the 449 pan participants. In the cases of the other two plans, supplemental applications were filed with no $ amount targeted, but they were looking to take advantage of the PBGC’s revised Final Final Rules in seeking additional financial assistance for 2,250 combined participants.

We are further pleased to report that two Priority Group 2 plans, Freight Drivers and Helpers Local Union No. 557 Pension Plan and the Sheet Metal Workers Local Pension Plan, had their applications approved during the last week. The Local 557 application was a revised submission and they will receive more than $192 million to help support the promised benefits for the fund’s 2,273 participants, while the Sheet Metal Workers anticipate collecting $28.8 million for its 1,649 members from its initial filing.

We still have no update from the PBGC regarding my concerns about fixed income investments being return-seeking unless used to specifically defease pension liabilities. Regrettably, but not surprisingly, both US bond and equity markets continue to operate under great stress caused by the US Federal Reserve’s action to fight inflation through a rising Federal Fund Rate, which reveals no stop in momentum at this time. The impact on SFA proceeds received and invested could be truly damaging.

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