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

We hope that you had a great weekend. It is easy at this time of year to get distracted with college and pro football, baseball playoffs, the start of hockey season, and the turning of the leaves in the Northeast, not to mention the incessant rain that has been falling in New Jersey. I don’t know if any of these events/activities impacted the activity level at the PBGC, as they implement the ARPA legislation, but something must have slowed their progress.

According to the PBGC’s latest update (October 13th), there were no new applications filed, approved, denied, or withdrawn. This includes the 25 applications that were previously submitted and the 92 applications that remain on the waiting list (see below). Overseeing ARPA’s implementation has been a monumental task for the PBGC. I suspect that there is always a ton of work going on behind the scenes, but the visible output from that activity has slowed recently.

Only one plan of the 65 that have received approval for its SFA grant has yet to receive the money. Paper Handlers’ – Publishers’ Pension Plan received approval on September 21, 2023 for an award of $20.6 million that will support the 244 plan participants. With elevated interest rates currently available to plan sponsors, the investment of the SFA proceeds into a cash flow matching (CFM) strategy has never been more timely. Why take equity risk given the uncertainty of the economy? In addition, return-seeking fixed income products will potentially experience the third consecutive year of negative returns, as rising rates impact a bond’s principal. With a CFM strategy, the careful matching of bond cash flows of income and principal with the plan’s liability cash flows (benefits and expenses) eliminates interest rate risk, as benefits are future values that are not interest rate sensitive. Any questions? Contact us (ryanalm.com), as we are always available to help.