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

No Summer doldrums for the PBGC, as last week witnessed considerable activity for the ARPA program. There were three pension plans that received approval for the SFA. In addition, there were three applications received and one withdrawn. Happy to report that there were no applications denied. Finally, there were no additions to the waiting list.

The three successful applications were for IUE-CWA Pension Plan, The Newspaper Guild International Pension Plan, and the UFCW Local One Pension Plan. These entities will receive $1.12 billion for the 38,761 participants in the plans. The UFCW plan has a Priority Group 5 and it is by far the largest of the three as they will receive $788 million. The other two recipients are the first non-priority group members to have their applications approved. As we’ve mentioned, there were 110 plans sitting on the waiting list. The PBGC has been actively permitting pension systems to submit the SFA application. To date, 13 plans have submitted applications from the waiting list.

The one application that was withdrawn during this latest week was Priority Group 5 member Local 917 Pension Plan, Floral Park, NY which was seeking $22.5 million for the plan’s 1,653 members. This latest application was previously revised. Perhaps the third time will prove to be charmed.

US interest rates continued to rise last week, with both short-term and long-term maturities along the Treasury yield curve rising to near peak levels since the interest rate cycle reversed. This action is making cash flow matching of the SFA assets even more attractive which will help lower the present value cost of those future benefits and expenses.