Category Archives: Uncategorized

11.07.25
by

Dhillon Sworn in as PBGC Director

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

As a follow-up to Tuesday’s PBGC blog post, Janet Dhillon was sworn in as the 17th director of the Pension Benefit Guaranty Corporation on November 3, 2025. “I am privileged to serve as the PBGC’s director and committed to ensuring PBGC achieves operational excellence and transparency,” Dhillon said. “I look forward to leading the agency in its mission to protect the retirement security of millions of American workers, retirees, and beneficiaries whose pensions are insured by PBGC.”

Let’s hope that her commitment includes looking at ways to reduce the cost to insure these plans which is often cited as a reason that many have sought to offload pension liabilities through a pension risk transfer. As I stated in the original post, premium increases didn’t seem warranted for private plans given the massive surplus. Also, there are still more than 100 multiemployer plans going through the ARPA/SFA process. Let’s hope that she is committed to this legislation, too.

PBGC Increases Premium Rates – Why?
11.06.25
by

You Don’t Say!

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

Morgan Stanley has published the results from their Taft-Hartley survey, in which they have to provided “insights into how Taft-Hartley plans are managing priorities and navigating challenges to strengthen their plans”. I sincerely appreciate MS’s effort and the output that they published. According to MS, T-H plans have as their top priority (67% of respondents) delivering promised benefits without increasing employer’s contributions. That seems quite appropriate. What doesn’t seem to jive with that statement is the fact that only 29% that improving or maintaining the plan’s funded status was important. Sorry to burst your bubble plan trustees, but you aren’t going to be able to accomplish your top priority without stabilizing the funded status/ratio by getting off the performance rollercoaster.

Interestingly, T-H trustees were concerned about market volatility (84%) and achieving desired investment performance while managing risk (69%). Well, again, traditional asset allocation structures guarantee volatility and NOT success. If you want to deliver promised benefits without increasing contributions, you must adopt a new approach to asset allocation and risk management. Doing the same old, same old won’t work.

I agree that the primary objective in managing a DB plan, T-H, public, or private, is to SECURE the promised benefits at a reasonable cost and with prudent risk. It is not a return game. Adopting a new asset allocation in which the assets are divided among two buckets – liquidity and growth, will ensure that the promises (monthly benefits) are met every month chronologically as far into the future that the assets will cover delivering the promised benefits. However, just adopting this bifurcated asset allocation won’t get you off the rollercoaster of returns and reduce market volatility. One needs to adopt an asset/liability focus in which asset cash flows (bond interest and principal) will be matched against liability cash flows of benefits and expenses.

This approach will significantly reduce the volatility associated with markets as your pension plan’s assets and liabilities will now move in lockstep for that portion of the portfolio. As the funded status improves, you can port more assets from the growth portfolio to the liquidity bucket. It will also buys time for the remaining growth assets to help wade through choppy markets. According to the study, 47% of respondents that had an allocation to alternatives had between 20% and 40%. This allocation clearly impacts the liquidity available to the plan’s sponsor to meet those promises. If allocations remain at these levels, it is imperative to adopt this allocation framework.

Furthermore, given today’s equity valuations and abundant uncertainty surrounding interest rates, inflation, geopolitical risk, etc., having a portion of the pension assets in a risk mitigating strategy is critically important. Thanks, again, to MS for conducting this survey and for bubbling up these concerns.

11.04.25
by

PBGC Increases Premium Rates – Why?

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

The demise of the defined benefit (DB) plan, most notably within the private sector, is harming the American worker and significantly reducing the odds of a dignified retirement. The Federal government should be doing everything that it can to protect the remaining pensions, including keeping fees low to ensure that these critically important retirement vehicles continue to operate. But unfortunately that doesn’t seem to be the case in this particular situation.

I have been very impressed with and supportive of the PBGC’s effort implementing the ARPA pension legislation, but I question the need to raise premium rates for 2026, which the PBGC has just announced. Why? As of fiscal year-end 2024, the PBGC’s single employer insurance program had a $54.1 BILLION surplus, as assets totaled $146.1 billion and liabilities stood at $92.0 billion. Despite these significant excess resources, the PBGC is increasing rates for the “flat rate premium per participant” in single-employer plans to $111 per participant in 2026 from $106. This 4.7% increase was described in a Chief Investment Officer article as modest! That increase doesn’t seem modest anyway you look at it, but certainly not when one remembers that $54 billion surplus. What is the justification? The rate per $1,000 in “unvested benefits”, not subject to indexing, was frozen by Congress in Section 349 of the SECURE 2.0 Act of 2022 and therefore remains $52. Seems like we need more legislation to freeze the flat-rate premium.

Despite the significant improvement in the multiemployer pension program due to the Special Financial Assistance (SFA) related to ARPA pension reform, that insurance pool is still underwater. As a result, multiemployer plans that only pay a per-participant premium will see the per-participant rate for flat rate premiums rise to $40 from $39 next year. That amounts to an increase of 2.6%. So, the program that is underwater sees a premium increase of 2.6%, while the insurance pool with the massive surplus gets an outsized 4.7% increase? I guess one must work for the government to understand that decision.

Again, we need to do much more to protect DB pensions for all American workers. Asking untrained individuals to fund, manage, and then disburse a “retirement benefit” with little to no disposable income, low investment knowledge, and no crystal ball to help with longevity considerations is just poor policy doomed to failure. We are the wealthiest country in the world, yet we can’t seem to figure out how to control costs associated with retirement, healthcare, education, childcare, etc. and in the process, we are crippling a majority of American families. It isn’t right!

11.03.25
by

ARPA Update as of October 31, 2025

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

I hope that you had the chance to enjoy some beautiful Fall weather and some fun on Halloween. I’m having a tough time believing that we are already 5/6s through 2025.

Regarding ARPA and the PBGC’s implementation of this critical legislation, last week had the PBGC accepting four initial applications. Unfortunately, the e-Filing portal is now temporarily closed with 72 pension funds still waiting to submit their initial application.

In other ARPA news, no applications were approved keeping the SFA recipients at 144 since July 2021. There were also no funds asked to repay a portion of the SFA due to census errors, and it has been nearly 1 1/2 months since the last fund repaid some SFA. Fortunately, none of the systems seeking SFA were denied due to ineligibility. However, Iron Workers-Laborers Pension Plan of Cumberland, Maryland, withdrew its initial application seeking $27.1 million for the 754 plan participants.

In somewhat surprising news, Operating Engineers Local 800 and the Wyoming Contractors Association, Inc. Pension Plan, Local 240 Pension Fund, and International Union of Electrical Local 431 Pension Fund each requested to be added to the waitlist. Local 240 pension Fund also locked-in the SFA measurement date as of July 31, 2025. As I’ve been reporting, not sure how the PBGC will get through the remaining initial applications by the December 21, 2025, deadline.

Despite the Fed’s recent 25 basis point cut in the Fed Funds Rate to 3.75%-4.0%, the long end of the yield curve is seeing rates rise. The 30-year Treasury Bond yield was 4.69%, as of the writing of this post. That is up about 0.2% since the Fed’s latest action. The higher rates provide additional cost savings and coverage for SFA recipients through a cash flow matching (CFM) strategy.

10.30.25
by

Cash Flow Matching: Bringing Certainty to Pension Plans

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

Imagine a world, or at least the United States, where pension plans are no longer subject to market swings and the uncertainty those swings create. What if you could “guarantee” (outside of any corporate bond defaults) the promises made to your plan participants, ensuring their financial security with confidence? In today’s highly unpredictable investing environment, relying solely on the pursuit of investment returns is a risky ride—one that guarantees volatility and sleepless nights but not necessarily success. It’s time to rethink how we manage defined benefit (DB) pension plans and embrace a strategy that brings true certainty: Cash Flow Matching (CFM). Discover through the hypothetical conversation below how CFM can transform your investing approach, protect your plan, and deliver peace of mind for everyone involved. Let’s go!

Why are we talking about Cash Flow Matching (CFM) today?

First off, thanks for taking a few minutes to chat with me. As you may have heard me say before, our mission at Ryan ALM, Inc. is simple — to protect and preserve defined benefit (DB) pension plans and to secure the promises made to participants.

We believe that Cash Flow Matching (CFM) is one of the few strategies that can help us keep those promises with real certainty.

Why Now?

Because the world feels more uncertain than ever.

And if we’re honest, most of us don’t like uncertainty. Yet somehow, in the pension world, many plan sponsors have gotten used to it. Why is that?

Over the years, we’ve been taught that managing a DB plan is all about chasing returns. But that’s not really the case. When a plan invests 100% of its assets purely with a return objective, it locks itself into volatility — not stability or success.

That approach also puts your plan on the “asset allocation rollercoaster,” where markets rise and fall, and contributions swing higher and higher along with them. It’s time to step off that ride — at least for part of your portfolio.

So if it’s not all about returns, what is the real objective?

Managing a DB pension plan is all about cash flows — aligning the cash coming in (from principal and interest on bonds) with the cash going out (for benefits and expenses).

The real goal is to secure those promised benefits at a reasonable cost and with prudent risk. That’s the foundation of a healthy plan.

Does bringing more certainty mean I have to change how I manage the plan?

Yes — but only a little. The adjustments are modest and easy to implement.

How can I adopt a CFM strategy without making major changes?

The first step is to reconfigure your asset allocation. Most DB plans are currently 100% focused on returns. It’s time to split your assets into two clear buckets:

  1. Liquidity bucket – designed to provide cash flow to pay benefits and expenses.
  2. Growth bucket – focused on long-term return potential.

What goes into the liquidity bucket?

Most plans already hold some cash and core fixed income. Those assets can move into the liquidity bucket to fund benefit payments and expenses.

And what happens with the remaining assets?

Nothing changes there. Those assets stay in your growth or alpha bucket. The difference is that you’ll no longer need to sell from that bucket during market downturns, which helps protect your fund from the negative impact of forced selling.

Is that all I need to do to create more certainty?

Not quite. You’ll also want to reconfigure your fixed income exposure.

Instead of holding a generic, interest-rate-sensitive bond portfolio (like one tied to the Bloomberg Aggregate Index), you’ll want a portfolio that matches your plan’s specific liabilities — using both principal and income to accomplish the objective.

That’s where true cash flow matching comes in.

How does the matching process work?

We start by creating a Custom Liability Index (CLI) — a model of your plan’s projected benefit payments, expenses, and contributions. This serves as the roadmap for funding your monthly liquidity needs.

What information do you need to build that index?

Your plan’s actuary provides the projected benefits, expenses, and contributions as far out into the future as possible. The more data we have, the stronger the analysis. From there, we can map out your net monthly liquidity needs after accounting for contributions.

Which bonds do you use to match the cash flows?

We invest primarily in U.S. Treasuries and U.S. investment-grade corporate bonds. We stick with these because they provide dependable cash flows without introducing currency risk.

We limit our selections to bonds rated BBB+ or higher, and the longest maturity we’ll buy matches the length of the mandate. For example, if you ask us to secure 10 years of liabilities, the longest bond we’ll buy will mature in 10 years.

Do you build a laddered bond portfolio?

No — a traditional ladder would be inefficient for this purpose.

Here’s why: the longer the maturity and the higher the yield, the lower the overall cost of funding those future liabilities. So instead of a simple ladder, we use a proprietary optimization process to build the portfolio in a way that maximizes efficiency and minimizes cost.

It sounds manageable — not a big overhaul. Am I missing something?

Not at all. That’s exactly right.

Dividing assets into liquidity and growth buckets and reshaping your bond portfolio into a CFM strategy is typically all that’s required to bring more certainty to part of your plan.

Every plan is unique, of course, so each implementation will reflect its own characteristics. But generally speaking, CFM can reduce the cost of future benefits by about 2% per year — or roughly 20% over a 10-year horizon.

On top of that, it helps stabilize your funded status and contribution requirements.

How much should I allocate to CFM?

A good starting point is your existing cash and bond allocation. That’s the least disruptive way to begin.

Alternatively, you can target a specific time horizon — for example, securing 5, 7, or 10 years of benefits. We’ll run an analysis to show what asset levels are needed to meet those payments, which may be slightly more or less than your current fixed income and cash allocations.

Once implemented, do I just let the liquidity bucket run down?

Most clients choose to rebalance annually to maintain the original maturity profile. That keeps the strategy consistent over time. Of course, the rebalancing schedule can be customized to your plan’s needs and the broader market environment.

This all sounds great — but what does it cost?

In line with our mission to provide stability at a reasonable cost and with prudent risk, our fee is about half the cost of a typical core fixed income mandate.

If you’d like, we can discuss your specific plan details and provide a customized proposal.

Final thoughts

Thank you for taking the time to explore CFM. Many plan sponsors haven’t yet heard much about it, but it’s quickly becoming a preferred approach for those who value stability and peace of mind.

At the end of the day, having a “sleep well at night” strategy benefits everyone — especially your participants.

10.28.25
by

Uncertainty versus Change

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

Seems like we have a conflict within the management of defined benefit plans. On one hand, human beings (plan sponsors) despise uncertainty. But nearly all public DB pension plans are embracing uncertainty in how they are managed. How? Through a traditional asset allocation framework that focuses the fund’s assets on a performance objective – the return on asset assumption (roughly 7% for the average public plan). Each second that the capital markets are operating, uncertainty is abundant, as price movements are out of one’s control. So let’s change how plans are managed. Not so simple, as those same human beings hate change. Oh, boy.

I have the privilege of speaking at the NCPERS Fall conference tomorrow. The title of my presentation is “Bringing an Element of Certainty to Pension Management”. Folks should absolutely eat up this topic, but given the conflict cited above, it will be interesting to see if the trustees in the audience embrace the concept of achieving some certainty despite having to implement change to their current operating practices.

Given that both uncertainty and change are difficult for humans, what are we to do? Well, psychological research suggests that uncertainty is generally more challenging because it disrupts our ability to predict, control, and prepare for outcomes, and in the process it triggers more anxiety and stress than change itself. According to the research:

  • Uncertainty introduces ambiguity about outcomes, which activates heightened anxiety in the brain. When people lack information about what will happen (such as market movements), they tend to experience more stress and feelings of helplessness.
  • Change, while uncomfortable, becomes easier to adapt to when the outcome is known, even if it’s negative. Humans can plan, adjust, and find coping strategies if they know what to expect. As a result, predictable change is less stressful than unpredictable change.

Why is uncertainty more challenging? Again, according to the research:

  • The human brain is wired to seek patterns and predict the future; uncertainty undermines this process, making adaptation feel more difficult.
  • Studies show that people prefer even certain bad news to ambiguous situations, because they can prepare for and process what’s coming.
  • Chronic uncertainty can lead to anxiety disorders and impaired decision-making, while change tends to prompt growth and learning once people know what they’re facing.

Uncertainty is usually more psychologically challenging than change because it creates anxiety about the unknown, whereas change with a known outcome—though still difficult—allows people to adapt and regain control. Given this reality, it would seem that reducing uncertainty within the management of a DB pension plan would outweigh the changes necessary to accomplish that objective. BTW, the changes needed aren’t great. All one needs to do to bring some certainty to the process is to convert the current core fixed income allocation to a cash flow matching (CFM) strategy that will SECURE the promised benefits for as far into the future as that allocation will cover. In the process you improve the fund’s liquidity profile and extend the investing horizon for the residual assets. A win/win!

How nice would it be to communicate to your plan participants that no matter what happens in the markets (uncertainty) the promised benefits are protected for the next 5-, 7-, 10- or more years. Talk about a “sleep well at night” strategy! Now that’s certainty that even change can live with.

10.27.25
by

Envy? Not Quite!

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

I happened to stumble over this quote in a recent Linkedin.com posting: The US retirement system is the envy of the world, and it is largely thanks to the continued success of 401(k)s! Wow, that pronouncement isn’t close to being accurate. Yes, that is my opinion, but it is supported by the annual work of Mercer and the CFA Institute that provide a global view on retirement systems and retirement readiness. I last published a post on this subject following the release of the 2024 study, in which I stated “I don’t know about you but if I had scored a 60 (actual score was 60.4 based on a scale of 0-100) during my school days, my letter grade would have likely been an F. Based on how I feel that we are prepared as a nation, I think that an F is much more appropriate than a C+. What about you?”

Well, that 60.4% retirement score had us below the average ranking of 63.4 and placed us 29th out of 48 countries in the study. That doesn’t seem like we’d be the envy of any country placing above us. Furthermore, the 2025 study shows a slight improvement in our overall score to 61.1, but the average score also improved to 64.6, and worse, with the addition of four more countries in the survey, we now rank 31st out of 52. That is shockingly poor, especially given the financial resources that we have as a country.

So, NO, the U.S. retirement industry is not the envy of the world. Far from it, in fact. With regard to the continued use of 401(k)s cited above, we took a program designed to be a supplemental “benefit” and replaced the primary source of retirement security (DB pension plans) and in the process dramatically reduced the security that American workers would have had if DB pensions were still utilized. As I’ve stated numerous times, asking untrained individuals to fund, manage, and then disburse a “retirement” benefit with little disposable income, no investment acumen, and NO crystal ball to help with longevity, is a silly initiative.

For us to become the “envy” of the retirement world, we are going to have to reestablish DB plans as the core retirement benefit. For those reluctant to reinstitute or initiate a DB pension, some 20 states have begun to use IRA-type programs for those workers not currently participating in an employer-sponsored plan. Getting many more folks active in retirement savings will go a long way to seeing the U.S. rank approach envy status.

10.27.25
by

ARPA Update as of October 24, 2025

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

If it is a Monday, it is ARPA/SFA update day. I’m bringing you this update from Fort Lauderdale, FL, where I’m attending and speaking at the NCPERS Fall conference. It looks like a wonderful agenda for the next few days. Regarding ARPA, how did the PBGC do last week? Let’s explore.

Last week saw limited action with only two applications received, including a revised application from a Priority Group 1 member. As you may recall, this was the first group permitted to submit applications all the way back in July 2021! Only 25 of the 30 members of that cohort have received Special Financial Assistance to date. Richmond, VA based Bricklayers Union Local No. 1 Pension Fund of Virginia, submitted a revised application seeking $12.9 million for its 395 participants, while International Association of Bridge, Structural, Ornamental and Reinforcing Ironworkers Local No. 79 Pension Fund, submitted an initial application hoping to secure $14.6 for 462 members. As an aside, the Ironworkers would be golden if the SFA desired was based on the length of the plan’s name.

In other ARPA news, or lack thereof, there were no applications approved, and fortunately, none denied. There were no pension plans forced to withdraw an application and none asked to repay a portion of the SFA received due to census errors. However, there was one more plan added to the burgeoning waitlist. The Soft Drink Industry Pension Fund is the 178th none-priority group fund to add its name to the list.

The next couple of months should be quite exciting for the PBGC as it works through the abundant list of applications for non-priority group members. U.S. interest rates have pulled back recently reducing some of the potential coverage period through a CFM strategy, but rates are still significantly higher than they were in 2021 when ARPA began to be implemented. Please reach out to us if you’d like to get a free analysis on what is possible once the SFA is received.

10.24.25
by

Illiquidity is a Risk – Not a Reward!

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

Thank you, Ian Toner, Verus CIO, who is quoted in a P&I article stating that “illiquidity is a risk, not a premium”. I couldn’t agree more! This notion that you get rewarded for reducing liquidity is silly! Pension plan management is all about cash flows – asset and liability. You need liquidity to meet the promises (benefits).

The incredible movement into alternatives is screwing up that relationship. As I’ve stated many times in my nearly 1,700 blog posts (RyanALM.com), it is time to adopt a new approach to asset allocation. Bifurcate the pension assets into liquidity and growth buckets. If you desire to place significant bets in alternatives, at least the liquidity bucket (hopefully a cash flow matching (CFM) strategy) will ensure that your current liquidity needs are being met with certainty.

One doesn’t even need to explore illiquidity in alternatives to understand that there is no premium return for taking on less liquid investments. Just observe the outperformance of the R1000 versus the R2000 since the inception (1984). Large caps are dominating. Where’s the small cap illiquidity premium of 1% that is built into so many asset allocation models?

Let’s get back to pension basics. You’ve made a promise to a participant. The objective should be to SECURE that promise at a reasonable cost and with prudent risk. It has never been about generating the highest return. All that strategy ensures is volatility!

10.22.25
by

And Now Utility Bills!

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

Electric payment company Payless Power released a report showing how Americans are being forced to choose between keeping the lights on, buying groceries, or paying for medicine. They conducted a survey of 1,069 people, including nearly half of whom came from low-income households, and regrettably 39% said they’d fallen behind on electricity payments in the past year.

Incredibly, more than 30% received at least one shutoff notice, while 11% had their power cut off due to missed payments. “Beyond the financial stress, high electricity prices are creating real safety risks,” Payless Power said. “More than half of low-income households said they went without heat or air conditioning for several days in the past year because they couldn’t afford it.”

The impact of having one’s electricity shut off has led roughly 30% of the respondents to feel physically unsafe at home during extreme temperatures. Not unlike the challenging economic times found during the Great Depression, nearly one in four sent children or pets away from their home to escape dangerous indoor conditions.

More than half (52%) of low-income households cut back on groceries to pay utility bills, while 16% skipped medication or medical care. Another 19% reduced transportation or internet spending, and 5% missed rent or mortgage payments. As you can imagine, larger families are hit hardest, as households with five or more people were nearly twice as likely to fall behind as those homes with two or fewer individuals at home.

Rising utility costs come as households are already stretched thin by higher housing costs and food prices compounded by a deteriorating labor market. Research from Goldman Sachs shows consumers are absorbing >50% of the cost of President Trump’s widespread tariffs. In a Harris/Axios poll, 47% of Americans said groceries are more difficult to afford than they were in September 2024.

Lastly, as of Q2’25, Moody’s and the Federal Reserve estimate that the top 10% of income earners in the U.S. account for 49.2% of the consumption. This is the highest percentage on record dating back to when data collection began in 1989. A level of concentration such as this is NOT good for the long-term viability of the U.S. economy.

Now 51% of the Median Household Income