Category Archives: Uncategorized

06.09.25
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ARPA Update as of June 6, 2025

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

Pleased to provide you with another weekly update on the PBGC’s implementation of the critically important ARPA pension legislation. We are roughly 1 1/2 years from the completion of this program and yet, more pension funds are seeking to be added to the waitlist. In just the past week, another six funds were added to the list, including Bakery and Sales Drivers’ Local 33 Partitioned Pension Fund, Oregon Printing Industry Pension Trust, Local No. 171 Pension Plan, Licensed Tugmen’s and Pilots’ Pension Fund, San Diego Plasterers Pension Trust, and the Ironworkers Local No. 6 Pension Plan. In total 132 funds sought SFA that weren’t part of the original six priority groups that became five after further review.

There were no new applications submitted during the prior 7-day period, as the PBGC’s eFiling portal remains temporarily closed. There are currently 19 applications with the PBGC, including one Priority Group 1 member and a recently submitted Priority Group 2 application. There remains one application with a June 2025 deadline for action. Happy to report that two funds received approval for their applications, including New Bedford Longshoremen’s Pension Plan and Cement Masons Local No. 524 Pension Plan, both of which are non-priority group members. In total, they will receive just under $6 million in SFA plus interest for the 280 plan participants.

There were no plans asked to repay a portion of the SFA due to census errors and no plans had their applications denied. There were two plans running up against the PBGC’s 120-day window that withdrew applications, including Teamsters Local 277 Pension Fund and Laborers National Pension Fund.

Given uncertainty related to the impact of the tariffs on consumption, jobs, earnings, etc. The Federal Reserve remains cautious in its approach to future rate movements. As a result, U.S. interest rates have migrated higher providing plan sponsors with a wonderful opportunity to defease the promised benefit payments and in the process extend the potential coverage period. As always, we are willing to provide a free analysis to help any SFA recipient think through an appropriate asset allocation framework.

06.09.25
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Capital Distributions From Private Equity Collapse

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

I recently published a blog titled, Problem – Solution: Liquidity, in which I discussed the impact of pension plan sponsors cobbling together interest, dividends, and capital distributions from their roster of managers, and how that practice was not beneficial, especially during periods of stress in the markets. Well, one of those three legs of the “gotta, but how am I gonna, meet my monthly payment of benefits and expenses”, is really falling short at this time.

Dividends are far lower these days than they once were when equities were perceived to be quite risky. In fact, it wasn’t until 1958 that dividend income fell below interest income from bonds. Couple that phenomenon with the fact that capital distributions have plummeted, and plan sponsors are placing far greater emphasis on capturing interest from bonds than ever before. Yes, thankfully interest rates have risen, but the YTM on the BB Aggregate index is still only in the 4.7% range. That is not likely sufficient to meet monthly payouts, which means that bonds will have to be sold, too. The last thing one should want to do in a rising rate environment is to sell securities at a loss.

However, if the plan sponsor engaged a Cash Flow Matching (CFM) manager in lieu of an active core fixed income manager, the necessary liquidity would be made available each and every month of the assignment, as asset cash flows would be carefully matched against liability cash flows. Both interest and maturing principal would be used to meet those benefits and expenses. No forced selling. No scurrying around to “find” liquidity. A far more secure and certain process.

What if my plan isn’t fully funded. Does it make sense to use CFM? Of course, given that benefits and expenses are paid each month whether your plan is fully invested or not, wouldn’t it make more sense to have those flows covered with certainty? Sure, a poorly funded plan may only be able to use CFM for the next 3-5-years, but that’s the beauty of CFM. It is a dynamic process providing a unique solution for each pension plan. No off the shelf products.

06.06.25
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Milliman: Corporate Pension Funding Improves

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

Milliman has once again released the findings from the Milliman 100 Pension Funding Index (PFI). The index analyzes the top 100 largest corporate pension plans. May’s results highlighted an improved funded ratio, as the present value (PV) of liabilities fell by $19 billion, while assets grew by $2 billion. The combination led to a funded ratio of 104.9%, up from 103.0% as of April 30, 2025.

“The large jump in discount rates was the primary reason the PFI funded ratio rose for the second straight month in May,” said Zorast Wadia, author of the PFI. Today’s rate environment is likely putting pressure on traditional core fixed income strategies, but higher rates are providing plan sponsors of DB pension plans a wonderful opportunity to reduce risk by defeasing pension liabilities through cash flow matching (CFM).

“While this (large jump in discount rates) helped to offset the first-quarter funding slump, discount rates may not remain elevated indefinitely, underscoring the value of an asset-liability matching strategy for corporate pensions.” said Wadia. Don’t continue to live with great uncertainty. Secure a portion of your fund’s promises and bring a level of certainty to your plan. There is no better “sleep well at night” strategy than CFM.

Milliman’s full report can be viewed by clicking on the link below.

View the complete Pension Funding Index.

06.02.25
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Problem – Solution: Liquidity

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

Plan Sponsors of defined benefit pension plans don’t have an easy job! The current focus on return/performance and the proliferation of new, and in some cases, complicated and opaque products, make navigating today’s market environment as challenging as it has ever been.

At Ryan ALM, Inc. we want to be our clients’ and prospects’ first call for anything related to de-risking/defeasing pension liabilities. Ryan ALM is a specialty firm focused exclusively on Asset/Liability Management (ALM) and how best to SECURE the pension promise. For those of you who know Ron Ryan and the team, you know that this have been his/our focus for 50+ years. I think that it is safe to say that we’ve learned a thing or two about managing pension liabilities along the way. Have a problem? We may just have the solution. For instance:

Problem – Plan sponsors need liquidity to meet monthly benefits and expense. How is this best achieved since many plan sponsors today cobble together monthly liquidity by taking dividends, interest, and capital distributions from their roster of investment advisors or worse, sell securities to meet the liquidity needs?

Solution – Create an asset allocation framework that has a dedicated liquidity bucket. Instead of having all of the plan’s assets focused on the return on asset (ROA) assumption, bifurcate the assets into two buckets – liquidity and growth. The liquidity bucket will consist of investment grade bonds whose cash flows of interest and principal will be matched against the liability cash flows of benefits and expenses through a sophisticated cost-optimization model. Liquidity will be available from the first month of the assignment as far out as the allocation to this bucket will secure – could be 5-years, 10-years, or longer. In reality, the allocation should be driven by the plan’s funded status. The better the funding, the more one can safely allocate to this strategy. Every plan needs liquidity, so even poorly funded plans should take this approach of having a dedicated liquidity bucket to meet monthly cash flows.

By adopting this framework, a plan sponsor no longer must worry where the liquidity is going to come from, especially for those plans that are in a negative cash flow situation. Also, removing dividend income from your equity managers has a long-term negative effect on the performance of your equity assets. Finally, during periods of market dislocation, a dedicated liquidity bucket will eliminate the need to transact in less than favorable markets further preserving assets.

We’re often asked what percentage of the plan’s assets should be dedicated to the liquidity bucket. As mentioned before, funded status plays an important role, but so does the sponsors ability to contribute, the current asset allocation, and the risk profile of the sponsor. We normally suggest converting the current core fixed income allocation, with all of the interest rate risk, to a cash flow matching (CFM) portfolio that will be used to fund liquidity as needed.

We’ll be producing a Problem – Solution blog on a variety of DB plan topics. Keep an eye out for the next one in the series. Also, if you have a problem, don’t hesitate to reach out to us. We might just have an answer. Don’t delay.

06.02.25
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ARPA Update as of May 30, 2025

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

Welcome to the last update for May 2025. It sure seems like the year is flying by. Are we having fun yet?

It has been nearly four years (July 2021) since the PBGC began implementing the ARPA pension legislation. Despite a few stumbles, I think that the program has been a huge success. Somewhat surprisingly, we are still seeing multiemployer pension plans being added to the waitlist as they seek a share of the Special Financial Assistance (SFA). In fact, an additional 5 funds were added to the waitlist in the last week.

In other news, there were no applications submitted to the PBGC for review, as their eFiling portal remains temporarily closed. There are currently 24 applications in the PBGC’s queue, with seven needing to be completed in some way by the end of June and another seven by the end of July. There was one application approved, as Sheet Metal Workers’ Local No. 40 Pension Plan received approval for an SFA grant of $9.9 million including interest for the plan’s nearly 1,000 participants.

There was one application withdrawn, as Retail Food Employers and United Food and Commercial Workers Local 711 Pension Plan withdrew a revised application seeking $64.2 million in SFA for the plans 25,306 participants. Perhaps the third submission will prove successful. Lastly, there were no applications denied nor asked to repay a portion of the SFA grant. As I’ve been reporting, we are likely very near the end of the census error issue repayments.

When the original Butch Lewis Act (BLA) was being legislated it was estimated that approximately 114 multiemployer plans would be eligible for a “loan”. There are currently 100 more funds seeking support. If I remember correctly, everything needs to wrap up regarding this legislation by December 31, 2026. Clearly, there is still a ton of work ahead for the PBGC.

05.30.25
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Public Pension Funding Stable – Milliman

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

Milliman has released the output of their Public Pension Funding Index (PPFI), which covers the largest 100 public DB plans. Despite the turbulent markets during the month, the index showed a slight investment gain of 0.4%. This compares to the -0.12% experienced by corporate plans and reported through Milliman’s Pension Funding Index, that covers the top 100 corporate plans.

Among the largest public funds individual plans’ estimated returns ranged from -1.8% to 1.4%. In aggregate, the plans added about $24 billion in market value during the period, increasing AUM to $5.213 trillion at the end of the month. Furthermore, the deficit between plan assets and liabilities was unchanged since March at $1.34 trillion. The PPFI funded ratio rose from 79.5% as of March 31, to 79.6% as of April 30th. If pension liabilities for public plans were valued using the same discount rate as corporate plans do under FASB, liability growth would have been negative, as Milliman reported a 7 basis points increase in the corporate discount rate to 5.57% at April 30th from 5.50% at the end of March in their corporate update. That movement up in rates would have reduced the present value (PV) of those future benefit promises causing the funded ratio to rise some more.

You can find the complete report here.

05.29.25
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Union Wins NEW Defined Benefit Pension!!

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

Anyone who reads this blog knows that we at Ryan ALM, Inc. are huge proponents of defined benefit (DB) plans. We promote the use of DB plans as the only sensible retirement vehicle for the American worker. Blog after blog has discussed ways to secure the benefit promises for those pension plans still operating in the hope that the tide to offloading these critical funds would be slowed, if not stemmed.

When IBM announced that they were going to reopen their plan, I produced the post “Oh, What A Beautiful Morning”, and promised not to sing. I’m also not going to sing today, but I might just shout from the rooftops, if the rain stops in NJ. Why? There is a new DB fund that has just been approved! YES!!

Dee-Ann Burbin, The Associated Press, is reporting that “U.S. meatpacking workers are getting their first new defined benefit pension plan in nearly 40 years under a contract agreement between Brazil-based JBS, one of the world’s largest meat companies, and an American labour union”.

The United Food and Commercial Workers union said 26,000 meatpacking workers at 14 JBS facilities would be eligible for the multi-employer pension plan. “This contract, everything that was achieved, really starts to paint the picture of what everybody would like to have: long-term stable jobs that are a benefit for the employees, a benefit for the employers and a benefit for the community they operate in,” Mark Lauritsen, the head of the UFCW’s meatpacking and food processing division, told the Associated Press in an interview.

In a statement, JBS said the pension plan reflected its commitment to its workforce and the rural communities in which it operates. “We are confident that the significant wage increases over the life of the contracts and the opportunity of a secure retirement through our pension plan will create a better future for the men and women who work with us at JBS.” Lauritsen said DB pension plans used to be standard in the meatpacking industry but were cut in the 1980s as companies consolidated. Big meat companies like Tyson Foods Inc. and Cargill Inc. now offer 401(k) plans but not traditional pensions.

According to Burdin’s article, the union started discussing a return to pensions a few years ago as a way to help companies hang on to their workers. “The good thing about a 401 (k) is that it’s portable, but the bad thing about a 401 (k) is that it’s portable,” he said. “This was a way to capture and retain people who were moving from plant to plant, chasing an extra dime or a quarter”, according to Lauritsen

Workers hailed the plan. “Everything now is very expensive and it’s hard to save money for retirement, so this gives us security,” said Thelma Cruz, a union steward with JBS at a pork plant in Marshalltown, Iowa. A return to DB pension plans is unusual but not unheard of in the private sector. International Business Machines Corp. reopened its frozen pension plan in 2023. Let’s hope that this becomes a trend. As I’ve said many times, asking untrained individuals to fund, manage, and then disburse a “benefit” without disposable income, investment acumen, or a crystal ball is just silly! DB plans help the American worker avoid that trifecta of stumbling blocks!

05.28.25
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Where’s The Beef?

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

In case this little ditty got by you, today is National Hamburger Day. According to the history books, the beef patty that most of us love originated in Hamburg, Germany. It has nothing to do with the meat, which as far as I know was never pork/ham. I bring you this info not only because I am looking forward to my burger later this evening, but because of a lack of “beef” in today’s retirement industry.

Despite adoption of financial wellness programs, millions of workers in their 50s and early 60s remain critically unprepared to fund their retirement, “according to a new report from the Institutional Retirement Income Council”. How bad are the stats? Nearly 50% of Americans aged 55 to 64 have NO retirement savings – zilch, nada, zippo! That info comes courtesy of the Federal Reserve Board’s 2023 Survey of Consumer Finances, which was cited in the IRIC report. Furthermore, for those that have accumulated retirement savings, the median account balance is only $202,000, and totally insufficient for a retirement that could last more than 20 years. Applying the 4% rule to annual withdrawals provides this median participant an annual spending budget of $8,080. That certainly won’t get you much.

It gets worse. According to a bank of America study, “only 38% understand how to properly claim Social Security”. Compounding these issues is the fact that most underestimate how much they might need for health care, estimated at up to $315,000 in medical expenses, per Fidelity Investments.  

IRIC Executive Director Kevin Crain, the report’s author, wrote that the lack of preparedness is already leading to a troubling trend of “delayed retirements, workplace disruption, and heightened financial stress among older employees and their employers.”  

This dire situation needs to be rectified immediately, and the only way to ensure a sound retirement for our American workforce is to once again institute defined benefit (DB) pension plans. Asking untrained individuals to fund, manage, and then disburse a “benefit” through a DC plan without disposable income, investment acumen, or a crystal ball to help with longevity is just silly. There’s just no beef in today’s retirement offerings!

Where’s Clara Peller when we need her the most?

05.27.25
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ARPA Update as of May 23, 2025

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

I hope that you had an enjoyable Memorial Day Weekend. Furthermore, I hope that you took a few minutes to reflect on all those that paid the ultimate sacrifice to ensure that we continue to live in freedom. May they never be forgotten!

With respect to the implementation of the ARPA legislation, the PBGC is reporting that there were no new applications received. However, there was one application for Special Financial Assistance (SFA) approved, and it was a large grant. Southern California United Food and Commercial Workers Unions and Food Employers Joint Pension Plan, a Priority Group 6 member, had its revised application approved which will provide them with nearly $1.3 billion in SFA to support 193,302 plan participants. Congrats!

In other ARPA news, there were no applications denied and no excess SFA repaid. However, there was one application withdrawn. Warehouse Employees Union Local No. 730 Pension Trust Fund, a non-priority group member, was seeking $110.9 million in SFA. There were no pension funds seeking to be added to the current waitlist, but three of the funds on that list decided to lock-in the SFA measurement date, which just happened to be 2/28/25 for each.

U.S. interest rates rose last week, and the 30-year Treasury Bond yield eclipsed 5% once again. Rates have backed off to start the week, but they remain quite robust providing plan sponsors the opportunity to secure the promised benefits at significant cost reduction. Let’s hope that they remain elevated for the 9 multiemployer plans scheduled to have action taken by the PBGC on the applications in June.

05.23.25
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AAA Bonds… A Time That Was

By: Ronald J. Ryan, CFA, Chairman, Ryan ALM, Inc.

The first bond indexes were invented by Art Lipson, my boss, at Kuhn Loeb in the summer of 1973. At that time, the bond market was dominated by AAA Government and corporate bonds. The Kuhn Loeb Government bond index was 100% AAA, and the Kuhn Loeb corporate bond index structure was:    

AAA = 37%    AA = 25%    A = 32%    BBB= 5%

Given the recent downgrade by Moody’s of Treasuries to Aa1 from Aaa we now have an investment grade structure with almost the absence of AAA bonds as evidenced by the Bloomberg Aggregate index:  

AAA = 3.1%   AA = 47.9%   A = 11.4%   BBB = 11.4%   NR = 20.8%   Other = 5.4%

Treasuries and Agencies = 46.08% of the Aggregate index and this exposure will likely grow due to the growing US deficit. This suggests that the Aggregate index yield spread versus A/BBB corporate bonds should widen over time. The Bloomberg Corporate bond index structure is now heavily skewed to A and BBB bonds:  

AAA = 1.1%   AA = 6.3%    A = 45.2%    BBB = 44.9%  Other = 2.6%.

The pension ROA hurdle rate has been in a downward trend for some time and is currently around 6.50% to 7.00% for most pensions. Notably, the ROA is actually a series of ROAs for each asset class weighted to arrive at a single total ROA. The yield of the Bloomberg Aggregate is usually the projected ROA for bonds. The Ryan ALM cash flow matching (CFM) model (we call the Liability Beta Portfolio™  or LBP) will outyield the Aggregate by 50 – 100 basis points depending on the average maturity since it is a corporate bond portfolio skewed to A/BBB+ credits. This means that the LBP will enhance the ROA as shown below which may reduce Contribution costs as well:

                                                    Yield            Weight      ROA          Weight     ROA          Weight     ROA

Bloomberg Aggregate           4.50%             20%       0.90%         30%     1.35%           40%      1.80%

      Ryan ALM LBP                    5.50%             20%       1.10%          30%     1.65%           40%      2.20%

Ryan ALM highly recommends that pensions transfer their current core bond allocations to CFM. The benefits of our LBP are significant and numerous:

  1. LBP matches and fully funds monthly B+E thereby securing the benefits
  2. Enhances ROA by out-yielding index benchmark for fixed income
  3. Provides liquidity to fully fund B+E so no need for cash sweep
  4. Best inflation hedge since it funds actuarial B+E projections
  5. Focuses on actuarial FVs thereby mitigating interest rate risk
  6. By matching FVs CFM should also duration match liabilities
  7. Reduces funding costs by 2% per year = 20% on 1-10 years 
  8. Reduces asset management costs (Ryan ALM fee = 15 bps)
  9. Reduces volatility of the funded ratio + contributions
  10. Buys time for Alpha assets to grow unencumbered

Remember:  the pension objective should be to fully fund and secure the promised benefits in a cost-efficient manner with prudent risk.