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

As we begin this holiday week, we at Ryan ALM, Inc. wish you and yours a very Happy Thanksgiving!

The window has been opened for Priority Group 5 multiemployer pension plans (effective November 15th). Did any of those plans take advantage of the opportunity? Simply put – no! Actually, there were no new or supplemental applications filed in the last week. We are happy to report that two plans, Teamsters Local Union No. 52 Pension Fund and the New York State Teamsters Conference Pension and Retirement Fund had their revised applications approved. Both of these plans were Priority Group 2 members (MPRA suspension and Critical and Declining) that will receive $84.9 and $963.4 million, respectively. They join the Bricklayers and Allied Craftsmen Local 7 Pension Plan as the only three approved plans that have yet to receive the SFA funds.

As a reminder, the PBGC is anticipating that as many as 15 Priority Group 5 plans will file. The Priority Group 6 members must wait until that window becomes ajar currently slated to occur on February 11, 2023.

US capital markets remain in a state of flux as US Federal Reserve action continues to put pressure on interest rates as they attempt to thwart decades-high inflation. Forecasts as to the eventual peak in inflation, US rates, and stock and bond performance range broadly, as you can imagine. Given this great uncertainty, we continue to believe that pension systems receiving the SFA are best served by defeasing pension liabilities with bond cash flows of principal and interest. Securing the promised benefits was the original intent of the ARPA legislation. It is by far the most fiduciarily prudent implementation.