Category Archives: Uncategorized

02.20.26
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The Median Account May Not Be <$1k, But It Is Still A Crisis!

By: Russ Kamp, CEO, Ryan ALM, Inc.

There has been some debate within the investment industry related to National Institute on Retirement Security’s (NIRS) recent release of their report titled, “Retirement in America: An Analysis of Retirement Preparedness Among Working-Age Americans”. A report that claimed that “across all workers (21-64), including those with no savings, the median amount saved was only $955.”

Those complaining about the findings cited as issues the inclusion of young workers, while also citing that the information used in the analysis was self-reported. Furthermore, there was mention of the fact that there is an impending massive wealth transfer from both the Silent and Baby Boomer generations to Millennials that will act to mitigate retirement savings shortfalls. Really? Let’s explore.

Including young workers will skew the results, as most haven’t had the chance to establish households and begin to save. Let’s focus on more mature workers, such as those age 55-64. How are they doing? According to Vanguard, the median (I hate averages) 401(k) balance for participants in that age cohort is only $95,642, as reported in Vanguard’s How America Saves 2025 report. That certainly doesn’t seem like a significant sum to carry one through a 20+ year retirement.

Furthermore, >30% of eligible DC participants are not contributing at all, while only 2% (according to Fidelity) have account balances exceeding $1 million. If one applies the 4% rule to an account balance with only $95,642, that participant can “safely” withdraw $3,826 per year to fund their retirement. That coupled with an average Social Security payout ($24.8k annually) is not going to get you too far. Heck, my property taxes in Midland Park are >$32k per year.

How about the impact of the great wealth transfer? Millennials must be set to receive a significant windfall – right? Not so fast, as the typical millennial can expect little or nothing from the “great wealth transfer”. For those who do receive something, amounts in the low five figures are a reasonable estimation: that certainly is not a life‑changing windfall. But aren’t the estimates regarding the transfer ranging from $84-$90 trillion with some estimates as significant as $100 trillion? Where is all that wealth going?

  • Fewer than one‑third of U.S. households receive any inheritance at all; 70–80% inherit nothing.​
  • Inheritances are disproportionately a feature of affluent families: in one analysis, inheritances are passed in about half of top‑5% households versus only 12% in the bottom 50%.​
  • Wealthier boomers are more than twice as likely to leave inheritances as poorer Americans, implying the transfer will largely reinforce existing inequalities.​
  • Across all households that receive something, the average inheritance is about $46,000, but this is heavily skewed by very large bequests at the top.
  • For the bottom 50% of households that receive an inheritance, the average is around $9,700.
  • For those in the broad “middle” (roughly the next 40% by wealth), the average inheritance is around $45,900.

So, in terms of expectation for the typical millennial, a large share will receive nothing, as their parents lack assets, too. Unfortunately, the “headline” trillions mostly reflect very large transfers to a relatively small share of already‑wealthy households. In short, the great wealth transfer is real in aggregate, but for the median millennial it looks less like a solution to a retirement shortfall!

The demise of defined benefit plans and the nearly exclusive use of defined contribution plans is creating a crisis. The current situation may not be as scary as the headline that the median amount saved is only $955, but $95,642 (or <$4k/year) is not going to help one navigate through a long retirement, especially as inflation associated with healthcare costs continues to rise rapidly.

Again, asking individuals to fund, manage, and then disburse a retirement benefit without the necessary disposable income, investment acumen, and NO crystal ball to help with longevity issues, is poor policy, at best. Everyday expenses are overwhelming family finances. The prospect of a dignified retirement is evaporating. Debating whether to include private/alternative investments and cryptos in 401(k) offerings is certainly not the answer. We need real solutions to this crisis. Where are the adults in the room?

02.18.26
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Good Question!

By: Russ Kamp, CEO, Ryan ALM, Inc.

We occasionally post questions received in reaction to our blogs in new blog posts since many of our readers might have similar thoughts/ideas. In reaction to yesterday’s post, “All-time High Funded Ratio” a reader calling themselves LoudlyObservant (great name) stated the following:

Why wouldn’t such well-funded plans take steps to lock in the funding of their beneficiary payments through a cash flow matching portfolio? Isn’t the first fiduciary duty of loyalty expressed in controlling the relevant risk to the beneficiaries, which involves BOTH securing adequate assets and then actually funding the payments? Many of these plans have hit the first goal but are still exposed to funding risk. With a ready solution at hand, the plan sponsors open themselves to criticism for not acting on their second responsibility.

Thank you, Loudly! Great questions and observations. We often talk about the fact that pension plans at all funding levels need liquidity, not just well-funded plans, but when you have a universe of plans that on average are fully funded, why not dramatically reduce risk. We witnessed what happened to DB pension plans at the end of 1999, when most plans were well overfunded only to see the funded status plummet and contribution expenses explode following two major market corrections.

I’m neither smart enough nor is my crystal ball better than anyone else’s to know if a major market correction is on the horizon but why take the chance unnecessarily. We’ve seen a significant percentage of Special Financial Assistance (SFA) recipients engage in cash flow matching to secure the SFA assets and the benefits that they will protect. Why not adopt CFM for the legacy assets, too? As we’ve mentioned, we are providing a service to you and your plan participants. It isn’t just another product. Time to get off the proverbial rollercoaster of returns and secure the promises and your plan’s funded status.

02.17.26
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All-time High Funded Ratio!

By: Russ Kamp, CEO, Ryan ALM, Inc.

Milliman released the 2025 output for its Multiemployer Pension Funding Study (MPFS), which analyzes the funded status of all U.S. multiemployer DB pension plans. The analysis incorporates the assumptions and data from each fund’s Form 5500 filing.

As of December 31, 2025, Milliman estimated the aggregate funded ratio reached a robust 103%, up significantly from 97% at year-end 2024. Milliman’s analysis finds that the rise in funding is largely due to strong asset gains during the year, but they also note that aggregate annual contributions have far exceeded the costs of benefit accruals and administrative expenses for several years, leading to the MPFS funding improvement.

Tim Connor, MPFS co-author, stated that “we’re seeing the results of proactive measures by many multiemployer plans to strengthen their funded status levels through increased contributions and benefit adjustments.” He went on to say that “over the past decade total contributions were approximately $331 billion, while total benefit expenses and admin costs were $212 billion.” The surge in contributions is not surprising given the injection of roughly $75 billion in Special Financial Assistance (SFA) granted through the ARPA legislation and implemented by the PBGC.

Milliman further reported that SFA totaling $5 billion (about 0.6% of all multiemployer assets) also contributed to the MPFS funding improvement during 2025. They calculate that $75 billion from an estimated $79 billion in SFA funding has already been distributed under the American Rescue Plan Act of 2021. Click on the link below to view the entire report.

View the year-end 2025 Multiemployer Pension Funding Study.

02.17.26
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ARPA Update as of February 13, 2026

By: Russ Kamp, CEO, Ryan ALM, Inc.

The PBGC team must have been preparing for Valentine’s Day last week, as there is nothing to update this week. However, they continue to show very little love to the 80 pension plans currently on the waitlist and described as plans terminated by mass withdrawal before 2020 plan year. We’ve talked about this class of applicants before. Will these plans’ hope for SFA just wither on the waitlist or is there pending litigation that might break this stalemate?

The PBGC’s eFiling portal remains temporarily closed. This isn’t a big deal since Plasterers Local 79 Pension Plan is the only pension plan on the waitlist, not described as a mass withdrawal casualty, not to submit an initial application yet. It is after December 31, 2025, which was the filing deadline for initial applications, so it will be interesting to see if they do get the opportunity to submit one.

Despite some continuing uncertainties, this program has been a huge success in my opinion, with 155 multiemployer plans receiving Special Financial Assistance (SFA) totaling $75.2 BILLION which is supporting the promised benefits for 1,876,433 American workers/retirees. Congrats to all involved!

We wish for you a wonderful week. We’ll continue to monitor the situation related to the mass withdrawal funds and we’ll report on any news coming from Washington DC or the PBGC. Stay well.

02.12.26
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It Should Be Relative and NOT Absolute

By: Russ Kamp, CEO, Ryan ALM, Inc.

I was participating on a panel at the Opal/LATEC conference yesterday. The moderator asked a question about the importance of process. In my response, I mentioned a number of process elements that are critical to the successful management of pension plans. Here is one point that I made that doesn’t get the attention that it deserves. Many, if not most, defined benefit pension plans have created an investment policy statement (IPS) that specifically restricts certain investments and their respective weights within the pension fund. The plan sponsor and their consultant likely allow investments in public equities and certain styles of equity management (i.e. value and growth, large and small cap, etc.). However, in many cases they restrict the exposure to any one security by an absolute amount such as 5%. This is the wrong approach.

Limiting exposures does reduce the risk that any one stock could have an outsized impact on the pension plan’s return, but by doing so, the plan sponsor is potentially negatively impacting the investment manager. Not all U.S. equity benchmarks are the same and treating them as such is potentially damaging to the manager and fund.

If a large cap growth manager has been retained and they are asked to manage a portfolio relative to the Russell 1000 Growth Index, limiting exposure in a stock to 5% would mean forcing that manager to make a negative bet against any stock in the index that has a weight greater than 5%. As of today, there are three stocks – Nvidia (12.9%), Apple (11.6%), and Microsoft (8.8%) – that the manager couldn’t own at benchmark weight, let alone own them above the index weight. This index is cap weighted, and as the stocks perform well their weight in the index grows. Not being able to own the stock at its index weight is harmful.

Worse, if the investment manager wants to make a positive bet on the stock, they can’t, forcing them to potentially choose weaker companies to round out their portfolio. When a manager is chosen, they are often picked because of their past track record of producing an excess return for a level of risk (tracking error). Restricting exposures to an absolute weight may render those previous return/risk characteristics moot. Furthermore, the exposure to a single stock should be relative to the weight in the index +/- band, which would be very dependent on the amount of tracking error that is comfortable to the plan sponsor.

For instance, a good information ratio (excess return/tracking error) is 0.33%. Meaning that for every 1% excess return, the manager is taking 3% tracking error. If the manager is hoping to add 2% above the benchmark over a cycle, that manager is going to have a tracking error close to 6%. The relative weight of a stock in a portfolio must reflect that level of potential tracking error. Higher tracking error portfolios need more flexibility. In this case, it would make sense to allow the manager to invest in Nvidia at the index weight +/- 2%. For lower risk strategies such as an enhanced index that only has 1% tracking error, perhaps the index weight +/- 0.5% would be appropriate.

Now, the Russell 1000 Growth Index is one of the more concentrated indexes with nearly 60% of the weight of the index in just the top 10 holdings, but it isn’t the only one. Currently, the S&P 500 has the same three stocks (Nvidia, Apple, and Microsoft) at weights greater than 5% and two others, Amazon and Alphabet, at weights >3%. If the manager wants to overweight a holding in the S&P 500 by +/- 2%, they would be restricted with a 5% absolute restriction and no ability to overweight.

I recommend that you review your IPS and make sure that your “risk control” objectives are not restricting your manager’s ability to produce an excess return. Remove any absolute constraint and replace it with a relative weighting based on the tracking error that the manager produces. Again, lower risk enhanced index managers will only need a +/- 0.5% to +/-1% restriction, while higher tracking managers will need greater flexibility.

02.12.26
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It’s Not A Product – It’s A Service!

By: Russ Kamp, CEO, Ryan ALM, Inc.

Anyone who has read my blogs (>1,700 to date) knows that my personal mission and that of Ryan ALM, Inc. is to protect and preserve defined benefit pension plans. How is our collective mission pursued? It is through the implementation of unique client-specific cash flow matching (CFM) assignments. Since every pension plan has liabilities unlike any other fund, a unique solution must be created unlike most investment management products sold today.

Here is the reality: There are a lot of wonderful people in our industry, representing impressive investment organizations, tasked with introducing a variety of investment products. Plan sponsor trustees, with the help of their investment consultants, must determine which products are necessary for their plan to help reach the goal of funding the promised benefits. This is an incredibly challenging exercise if the goal is to cobble together a collection of investment managers whose objective is to achieve a return on asset assumption (ROA). This exercise often places pension funds on the proverbial rollercoaster of returns. The pursuit of a return as the primary goal doesn’t guarantee success, but it does create volatility.

On the other hand, wouldn’t it be wonderful if one could invest in strategy that brings an element of certainty to the management of pension plans? What if that strategy solved the problem of producing ALL of the necessary liquidity needed to fund monthly benefits and expenses without having to sell securities or sweep cash (dividends and capital distributions) from higher earning products? Wouldn’t it be incredible if in the process of providing the liquidity for some period of time, say 10-years, you’ve now extended the investing horizon for the residual assets not needed in the liquidity bucket? Impossible! Hardly. Cash flow matching does all that and more.

I recently had the privilege of introducing CFM to someone in our industry. The individual was incredibly curious and asked many questions. Upon receiving my replies, they instinctively said “why isn’t everyone using this”? That person then said you aren’t selling a product: it is a SERVICE. How insightful. Yes, unlike most investment strategies that are sold to fill a gap in a traditional asset allocation in pursuit of the “Holy Grail” (ROA), CFM is solving many serious issues for the plan sponsor: liquidity and certainty being just two.

Substituting one small cap manager for another, or shifting 3% from one asset class or strategy to another is not going to make a meaningful impact on that pension plan. You get the beta of that asset class plus or minus some alpha. None of these actions solve the problem of providing the necessary liquidity, with certainty, when needed. None of them are creating a longer investing horizon for the residual assets to just grow and grow. None of those products are supporting the primary pension objective which is to SECURE the promised benefits at low cost and with prudent risk.

So, Ryan ALM, Inc. is providing a critical service in support of our mission which is to protect and preserve your DB pension plan. Why aren’t you and others (everyone) taking advantage of this unique service?

02.10.26
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Milliman: Corporate Pension Funding Soars

By: Russ Kamp, CEO, Ryan ALM, Inc.

Milliman has once again released its monthly Milliman 100 Pension Funding Index (PFI), which analyzes the 100 largest U.S. corporate pension plans, and the news continues to be quite good.

Market appreciation of 1.05% during January lifted the market value of PFI plan assets by $8 billion increasing total AUM to $1.327 trillion. A slight 1 bp rise in the discount rate to 5.47% lowered plan liabilities marginally to $1.217 trillion at the end of January. As a result, the PFI funded ratio climbed from 108.2% at the beginning of the year to 109.0% as of January 31, 2026. 

“January’s strong returns contributed $8 billion to the PFI plans’ funding surplus, while declining liabilities contributed another $2 billion,” said Zorast Wadia, author of the Milliman 100 PFI. “Although funded ratios have now improved for 10 straight months, managing this surplus will continue to be a central theme for many plan sponsors as they employ asset-liability matching strategies going forward.” We couldn’t agree more, Zorast! Given significant uncertainty regarding the economy, inflation, interest rates, and geopolitical events, now is the time to modify plan asset allocations by reducing risk through a cash flow matching strategy (CFM).

CFM will secure the promised benefits, provide the necessary monthly liquidity, extend the investing horizon for the non-CFM assets, while stabilizing the funded status and contribution expenses. Corporate plan sponsors have worked diligently tom improve funding and markets have cooperated in this effort. Now is not the time to “let it ride”. Ryan ALM will provide a free analysis to any plan sponsor that would like to see how CFM can help them accomplish all that I mentioned above. Don’t be shy!

Click on the link below for a look at Milliman’s January funding report.

View this month’s complete Pension Funding Index.

For more on Ryan ALM, Inc.

02.10.26
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ARPA Update as of February 6, 2026

By: Russ Kamp, CEO, Ryan ALM, Inc.

It looks like those of us in the Northeast will finally get some respite from the bitter cold, as temps will moderate this week and actually hit the 30s. However, those multiemployer pension plans currently sitting on the waitlist and classified as a Plan Terminated by Mass Withdrawal before 2020 Plan Year, continue to be frozen in place. According to the PBGC’s latest update, there are 80 plans that fall under the Mass Withdrawal classification. I’ll share more info on this subject later in this post.

Regarding last week’s activity, the PBGC is reporting that one fund, Operative Plasterers & Cement Masons Local No. 109 Pension Plan, a Troy, MI, construction union, will receive $13.7 million for the 1,439 plan members. In addition to the one approval, there was another fund that withdrew its initial application. Norfolk, VA-based International Association of Bridge, Structural, Ornamental and Reinforcing Ironworkers Local No. 79 Pension Fund was seeking $14.6 million in SFA for 462 participants in the plan.

There were no applications submitted for review. It appears that only one non-mass withdrawal plan, Plasterers Local 79 Pension Plan, remains on the waitlist. Fortunately, there were no plans asked to rebate a portion of the SFA grant due to census errors or any funds deemed no eligible.

Regarding the 80 mass withdrawal funds currently sitting on the waitlist, MEPs terminated by mass withdrawal under ERISA §4041A(a)(2) are explicitly ineligible for SFA under ARP/IRA rules, regardless of application timing. Furthermore:

No “initial application” option exists post-termination date.

Mass withdrawal means that all/substantially all employers completely withdraw leading to a plan termination.

PBGC SFA statute excludes §4041A(a)(2) terminated plans.

For the 80 funds sitting on the waitlist, it seems like a long shot that the APRA legislation will be amended to accommodate these funds seeking SFA. I’ll continue to monitor this situation in future posts.

02.05.26
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Continued Steepening

By: Russ Kamp, CEO, Ryan ALM, Inc.

Given today’s headline news related to initial jobless claims and layoffs for January, which were at the highest level since 2009, risk assets are once again selling off (Bitcoin -7% and Nasdaq -1.5%), while short-term Treasury notes are rallying. As a result, the U.S. Treasury yield curve is continuing to steepen, as reflected in the WSJ graph below.

The spread between 2-year notes and 30-year bonds was only 43 bps 12-months ago. The spread today is 1.37%. As we’ve mentioned, bond math is straightforward. The higher the yield (30-year Treasury bonds are 29 bps higher today than last year) and the longer the maturity, the greater the cost reduction in the future value of promised benefits.

Let us produce a free analysis that will highlight the potential cost reduction in those future promises either through a 100% cash flow matching assignment or a vertical slice of a portion of those liabilities. You’ll be positively surprised by the potential cost reduction.

02.04.26
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How Do You Know?

By: Russ Kamp, CEO, Ryan ALM, Inc.

I’m on my way home from another terrific FPPTA conference. The only issue I have is with the weather Gods. How is it that Orlando had weather similar to what New Jersey experiences during January? Yes, I was in a conference room from dawn to dusk, but it still wasn’t fair, especially since temps are set to hit 70+ today, while I’m now sitting at the airport. 

Okay, enough of my complaining. As mentioned, I just attended FPPTA’s Winter Trustee meeting in Orlando. They continue to do an excellent job providing critical education for trustees of all experience levels. As I’ve written, they have also developed a higher-level program for a select group of pension trustees that truly want to roll up their sleeves and like Dorothy and her friends, get behind the curtain. I’ve been fortunate to be a part of the first two TLC classes. As the FPPTA continues to develop their use of AI and the self-contained bot currently under construction, Florida public pension trustees will have critical information at their fingertips that few other states, if any, can provide. Great job!

Despite the robust curriculum, there is still much more that needs to be covered and comprehended by the trustees. For instance, there was a lot of discussion surrounding hiring and firing of managers during a particular case study. As I’ve observed over the years, the fortunate investment manager that gets hired usually has the best performance and a reasonable fee that doesn’t offset the performance advantage. Do pension trustees truly understand what they are buying? Often the manager selected is large and likely growing in terms of AUM. But are those advantages?

Worse, when a manager underperforms, which they will eventually do, whether that underperformance is related to a style rotation or something specific to that managers process, a decision must be made as to that manager’s fate. Do you keep the manager or let them go? On what basis are you making that decision? Again, you hired a manager because they had good performance. Did you understand their security selection process (insights) and how those insights were working? Did recent strong AUM growth fuel a positive response in the stocks that they owned? As we know, cycles in the investment industry are driven by cash flows, both positive and negative. More money chasing a few ideas drives up returns, while an exodus from those same ideas can tank an investment manager’s performance.

During one exchange of ideas, I asked the TLC participants if any of their funds were using performance fees for their long-only assignments. Only one trustee said that they had – too bad. We’ll discuss that issue in another post. Regarding the one affirmative response, they initiated a performance fee after an extended period of underperformance. Was that action correct? Paying asset-based fees with no promise of delivery on forecasted alpha is wrong, but retaining an underperforming manager may be just as bad whether they are on a performance fee or not. How did this trustee and his fellow board members know whether the manager had skill or if they once did, were their insights still robust?

Investment managers choose their portfolio holdings based on certain insights, and those insights can be measured as to their predictive ability (information coefficient or IC). An information coefficient is the correlation between predicted returns (or rankings of one stock versus another) and the subsequent results (realized returns). If an advisor is a growth manager, they likely swim in a subset of the U.S. equity universe. They then apply their insights to that subset of equity stocks. Each month they can array their portfolio holdings with the balance of the names in the universe that they did not select to see how their ideas stacked up.

You might be surprised to read that a monthly IC above 0.05% is considered fairly strong. An IC from 0.05% to 0.15% would be very strong and likely lead to consistent alpha generation. However, even the best investment ideas can go through challenging times when market dynamics are just out of whack with historic observations and relationships. But there are also times when ideas can get arbitraged away either by that managers growth or the broader investment community latching onto the same insight rendering it less effective or in some cases a negative forecaster/predictor.

So, I ask, when your manager is underperforming, do you know whether it is a market dynamic that is rendering the insight temporarily weak or has that manager’s forecasting ability been diminished? In the case of the manager who maintains strong forecasting ability, but the insight is just out of favor, you would likely want to retain them after a period of underperformance and maybe give them more assets to manage, but I would not recommend putting them on a performance fee (regression to the mean tendencies). However, if after your careful analysis you identify that the manager in question has seen their insights arbitraged away, that should lead you to terminate the manager, whether you like them or not! Let me know if you’d like to discuss his concept in greater detail.