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

The old adage of selling in May and going away is looking as if it were once again prophetic. We’ll see where markets close today, but the last couple of weeks should be a reminder that markets do go down, too.

That said, let’s focus on the task at hand: ARPA and the pension legislation that has been so powerful in rescuing 1+ million promised retirements. The latest week didn’t see a tremendous activity level, but progress was still made by the PBGC. Two new applications seeking SFA were received, including those from Oregon Processors Seasonal Employees Pension Plan and the Lumber Industry Pension Plan. Both non-priority group members filed their initial application. The Oregon processors are seeking $19.1 million in SFA for its 7,279 participants, while the Lumber plan is requesting $103.3 million for its 5,834 plan members.

In other news, Printing Local 72 Industry Pension Plan, was awarded $39.4 million in SFA and interest that will go to supporting the retirement benefits for 787 plan participants. The Printers were a Priority Group 5 member and their application had been withdrawn twice before in December 2022 and September 2023 before resubmitting a successful application in April 2024.

Fortunately, no plans were denied SFA and no applications were withdrawn. There were no plans agreeing to return a portion of the SFA as overpayment due to faulty population numbers. Lastly, there were no additions to the waitlist and no members on the waitlist that hadn’t locked in their discount rate did so in the latest week.

The tremendous move down in US interest rates will hurt plans that have locked in the discount rate at higher levels, as less SFA will be received. They will also be buying into a bond market that is now more expensive reducing the coverage period for those plans utilizing fixed income for a significant percentage of their forecasted benefits. As mentioned previously, we are happy to model different investment scenarios for plans that will soon be receiving SFA.