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

Good morning, and welcome to the last week of February. Wow, this month seems to have flown by.

With regard to the PBGC’s implementation of the ARPA legislation, activity is picking up. There were five applications submitted through the PBGC’s portal. These included 3 Priority Group 6 members and two funds without a priority designation. The five funds are the Retail, Wholesale and Department Store International Union and Industry Pension Plan (the initial application), the Bakery and Confectionery Union and Industry International Pension Fund, United Food and Commercial Workers Unions and Employers Midwest Pension Plan, the Radio, Television and Recording Arts Pension Plan, and the GCIU-Employer Retirement Benefit Plan.

The five plans are seeking $5.5 billion in SFA for slightly more than 200k plan participants. The Bakery and Confectionery Union is seeking nearly 60% of the $5.5 billion in SFA grant money. The Bakery and Confectionery Union cooked up applications in March 2023, October 2023, and again in February 2024. Hopefully, they have the right recipe this time.

In other news, there were no applications approved, but the Laborers’ International Union of North America Local Union No. 1822 Pension Fund did receive the SFA payment of nearly $16 million for its 525 participants. Fortunately, there were no applications denied and none were withdrawn.

The US interest rate environment continues to be favorable for plans receiving SFA grants, as higher rates mean that the future benefit payments can be defeased at lower cost. Given the strength of the economy and labor force, it is less likely that the US will experience a recession keeping the current rate environment higher for longer.