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

The PBGC didn’t let a little holiday get in the way of some ARPA activity last week. According to the terrific spreadsheet that they update and provide weekly, three more plans received approval for SFA grant monies. These plans include, Automotive Industries Pension Plan (Priority Group 6), Western Pennsylvania Teamsters and Employers Pension Fund (PG 2), and the Retail Clerks Specialty Stores Pension Plan (PG 5). In total, these plans will receive $1.42 billion for their combined 46,076 plan participants. The Automotive plan will receive just over 76% of the total grant money.

In other ARPA news, the Retirement Benefit Plan of the Newspaper and Magazine Drivers, Chauffeurs and Handlers Union Local 473 (quite the mouthful) became the sixth plan on the waiting list to have their application reviewed. The PBGC has 120 days from July 5th (11/2/23) to complete its review of the SFA application. There remain 104 plans on the wait list.

The United Food and Commercial Workers (UFCW) Union and Participating Food Industry Employers Tri-State Pension Plan withdrew its application on July 3rd. This Priority Group 6 plan is seeking $651 million for their 29,233 participants.

I’ve mentioned that the Bakery Drivers Local 550 and Industry Plan remains the only applicant to be denied. Here is the letter from the PBGC explaining why this fund was not eligible to receive SFA grant money.

Lastly, the US interest rate environment continues to support the use of cash flow matching to ensure that the promised benefits and expenses stretch as far as possible within the SFA bucket. These sinking funds should not be investing in return seeking assets (RSA) as the purpose is to lock in the B&E coverage as far into the future as possible. As we’ve mentioned previously, the sequencing of returns is critically important to the success of this legislation. Now is not the time to take on risk. Save that for the legacy assets that now have time to grow unencumbered.