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

Whether you celebrate Columbus Day or Indigenous People’s Day, we continue to celebrate the implementation of ARPA and the awarding of Special Financial Assistance (SFA) to eligible multiemployer pension plans. There isn’t a lot to review as far as activity from last week, but there is some.

Of great note, Bakery and Confectionery Union and Industry International Pension Fund, has submitted their revised application seeking $3.3 billion in SFA for the 103,056 plan participants. This Priority Group 6 member filed its initial application on March 1, 2023. The PBGC has until 2/3/24 to act on this submission.

In other news, there were no applications approved during the prior week, no additions to either the waiting list (still 111 plans to date) or the Lock-Ins list. There was one application withdrawn from consideration at this time. The Retirement Benefit Plan of the Newspaper and Magazine Drivers, Chauffeurs and Handlers Union Local 473, a non-priority plan, first submitted its application on July 5, 2023. They are seeking an SFA grant of $29.4 million for 804 plan members.

The SFA recipients going forward will have an incredible opportunity to invest the proceeds into a cash flow matching strategy that will have US interest rates at 6% or greater depending on the portion of the portfolio invested in IG corporate bonds. With yields at these levels it really doesn’t make any sense to assume risk through investments outside of investment grade bonds despite the PBGC allowing for 33% of the SFA to be invested in return-seeking investments. Tread carefully.