10.03.25
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Now 51% of the Median Household Income

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

You may recall that in April this year I penned a post on the impact of housing costs on one’s ability to fund a retirement fund. Unfortunately, it continues to get worse. According to a Goldman Sachs survey, “New Economics of Retirement,” 42% of Generation Z, Millennials and Generation X state they are living paycheck-to-paycheck, and 74% report struggling to save for retirement due to competing financial priorities – like housing costs, which according to the Planadvisor article in which I found this survey, now account for 51% of the median household income! To put that in perspective, in 2000 the median income needed to fund housing was 33%. Incredible.

It gets worse – truly! If you have a child or two or in my case, five, and you want to provide them with a quality post-graduate experience (college), it will now cost you 85% of one’s income to send them to a private institution. 85%! Sure, your child could go to a public university, but that still will cost a family 25% of their household income.

So, between housing and paying for your child’s college, you’ve already laid out a minimum of 76% of the family income. What about food, healthcare, utilities, property taxes, insurance, clothing, streaming services/cable, etc. Wonder why we have a retirement crisis?

When 42% of Gen X, Millennials, and Gen Z cohort members claim to be living from paycheck to paycheck, it shouldn’t be shocking. What may be more shocking is the fact that only 42% are struggling to get by. Furthermore, it shouldn’t be surprising that the top 10% of earners in the U.S. now account for 49% of the spending!

Can a society/economy function with such disparity? I fear not.

10.01.25
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Milliman: Public Pension Funding Improves

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

Milliman has released the latest results from their public pension fund index (PPFI). As a reminder, this index analyzes data from the U.S.’s largest 100 public DB pension plans. Pension funding improved for the fifth consecutive month. As a result, the PPFI funded ratio advanced from 83.0% at the end of July to 84.2%, as of August 31, 2025.

“Thanks to continued investment gains, 41 of the 100 largest public pension plans were more than 90% funded in August, with 18 of those plans enjoying a funding surplus,” said Becky Sielman, co-author of the Milliman PPFI.

Figure 5: Funded ratios at August 31, 2025

The pension plans collectively saw estimated August returns of 1.6% in aggregate, with plan performance ranging from an estimated 0.8% to 2.3%. The 1.6% gain translated to a $79 billion increase in funded status for the 100 PPFI plans. It is estimated that plan assets rose from $5.5 trillion as of July 31 to $5.6 trillion as of August 31, while the funding deficit between assets and plan liabilities declined from $1.12 trillion to $1.04 trillion during August. 

It is terrific to witness continued asset growth despite several cross currents potentially impacting markets. However, with the prospect for lower interest rates, as the U.S. labor market begins to weaken (ADP reported -32K jobs created in September), the present value of the future benefit payments (liabilities) will rise potentially offsetting future asset performance gains or worse, magnifying asset depreciation. Plan sponsors would be prudent to take some risk from their asset allocation frameworks at this time of improved funding.

Click on the link below to view the entire report.

View the Milliman 100 Public Pension Funding Index.

09.29.25
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ARPA Update as of September 26, 2025

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

Welcome to Autumn. Hopefully, the cooler weather will help the PBGC get through these next three months given that they still have 75 multiemployer pension plans waiting to submit an initial application. The PBGC has been processing about eight applications per month. I don’t think that pace is going to cut it for those sitting at the bottom of the queue. It will be interesting to see what transpires as we approach year-end.

There isn’t much to report regarding last week’s activity, as there were no applications submitted – new or revised. No applications approved. Furthermore, there were no pension funds required to rebate a portion of the SFA received resulting from census errors. Thankfully, there were no applications denied.

So, what was done? There were three more funds added to an already bursting waitlist, including Greater St. Louis Service Employees Pension Plan, Twin Cities & Vicinity Conference Board Pension Plan, and Luggage Workers’ Union Local No. 61 Retirement Plan. They’ll now wait and see whether they are given a chance to submit an initial application prior to the December 31, 2025, deadline. Finally, St. Louis Graphic Arts Pension Plan, which had only asked to be included on the waitlist during the previous week has locked in the SFA valuation date as of June 30th.

Despite the Federal Reserve’s recent cut in the Fed Funds Rate, longer-term Treasury yields have backed up anywhere from 12-18 bps, providing multiemployer plans the opportunity to defease benefits (and expenses) at higher yields.

09.25.25
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Taking From Peter to Pay Paul

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

Do you, or would you, consider yourself a “high earner” with a salary of $145k/year?

Try asking a family of four in NYC that question, when you consider the expenses from taxes (federal, state, city, sales, and property), the housing costs associated with an apartment, childcare, healthcare, food, clothing, etc. Yet, those at the IRS certainly do. In case you didn’t realize it, SECURE 2.0 is eliminating the tax deductibility of “make up” contributions for those 50 and up after they have maxed out their $23,500 annual contribution beginning in 2027. As a reminder, for those that 50-years old and up one can contribute another $7,500. For those between the ages of 60-and 63-years-old there is a super catch up contribution of $11,500. Why a 64- or 65-year-old can’t contribute more is beyond me. Perhaps it will blow out the U.S. federal budget deficit!

Unfortunately, if you are so lucky to earn a whopping $145k from a single employer in a calendar year, you will be forced to use a Roth 401(k) for those make up contributions. As stated previously, you lose the tax deductibility for those additional contributions. So, if you earn $200k and you contribute the additional $7,500 or the $11,500, instead of seeing your gross income fall by those figures, you will be taxed at the $200k level, increasing your tax burden for that year. Yes, the earnings within the account grow tax free, but the growth in the account balance is subject to a lot of risk factors.

We should be incentivizing all American workers to save as much as possible. Let’s stop with all these different gimmicks. Do we really want a significant percentage of our older population no longer participating in our economy? Those 65-years and older represent about 17% of today’s population, but they are expected to be 23% by 2050. Do we really want them depending on the U.S government for social services? No, and they don’t want that either. We want folks to be able to retire with dignity and remain active members of our economic community.

The demise of the traditional DB pensions has placed a significant burden on most American workers who are now tasked with funding, managing, and then disbursing a “retirement” benefit with little disposable income, no investment acumen, and a crystal ball to determine longevity as foggy as many San Francisco summer days. Again, with the burdens associated with all of the expenses mentioned above and more, it really is a moot point for many Americans to even consider catch up contributions, but for those lucky few, why penalize them?

09.24.25
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You Can’t Manage What You Don’t Measure!

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

Nearly 10 years ago, before joining Ryan ALM, I wrote an article about the idea that plan sponsors need to focus on their fund’s liabilities, as much as, if not more than, their plan’s assets. It shouldn’t be a shocking statement since the only reason that the plan exists is to fund a promise (benefit) that has been granted. Yet I would often get strange looks and frowns every time that concept was mentioned.

Why? Well, for over 50 years, pension sponsors and their consultants have been under the impression that if the return on assets (ROA) objective is achieved or exceeded, then the plan’s funding needs shall be sated. Unfortunately, this is just not true. A plan can achieve the ROA and then some, only to have the Funded Ratio decline and the Funded Status deteriorate, as liability growth exceeds asset growth.

We place liabilities – and the management of plan assets versus those liabilities – at the forefront of our approach to managing DB plans. Pension America has seen a significant demise in the use of DB plans, and we would suggest it has to do, in part, with how they’ve been managed. It will only get worse if we continue to support the notion that only the asset side of the pension equation is relevant. Focusing exclusively on the asset side of the equation with little or no integration with the plan’s liabilities has created an asset allocation that can be completely mismatched versus liabilities. It is time to adopt a new approach before the remaining 23,000 or so DB plans are all gone!

Our Suggestion

As this article’s title suggests, to manage the liability side of the equation, one needs a tool to measure and monitor the growth in liabilities, and it needs to be more frequent than the actuarial report that is an annual document usually available 3-6 months following the end of the calendar or fiscal year.

Such a tool exists – it is readily available, yet under-appreciated and certainly under-utilized! Ryan ALM has provided this tool to DB plan sponsors; namely, a Custom Liability Index (CLI), since 1991. This is a real time (available monthly or quarterly) index based on a plan’s specific projected liabilities. Furthermore, the output from this index should be the primary objective for a DB plan and not asset growth versus some hybrid index. Importantly, the CLI will provide to a plan sponsor (and their consultant) the following summary statistics on the liabilities, including:

  • Term-structure, Duration and Yield to Worst
  • Growth Rate of the Liabilities
  • Interest Rate Sensitivity
  • Present Value based on several discount rates

Different discount rates are used depending on the type of plan. GASB allows the ROA to be used as the discount rate for public pension plans, while FASB has a AA Corporate blended rate (ASC 715) as the primary discount rate for corporate plans. Having the ability (transparency) to see a plan’s liabilities at various discount rates with projected contributions is an incredible tool for both contribution management and asset allocation. Don’t hesitate to reach out to us for more information on how you can get a Custom Liability Index for your pension plan.

09.23.25
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Buy on the Rumor…

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

After 44-years in the investment industry I’ve pretty much heard most of the sayings, including the phrase “buy on the rumor and sell on the news”. I suspect that most of you have probably heard those words uttered, too. However, it isn’t always easy to point out an example. Here is graph that might just do the trick.

There had been significant anticipation that the U.S Federal Reserve would cut the Fed Funds Rate and last week that expectation was finally realized with a 0.25% trimming. However, it appears that for some of the investment community that reduction wasn’t what they were expecting. As the graph above highlights, the green line representing Treasury yields as of this morning, have risen nicely in just the last 6 days for most maturities 3 months and out, with the exception of the 1-year note. In fact, the 10- and 30-year bonds have seen yields rise roughly 10 bps. Now, we’ve seen more significant moves on a daily basis in the last couple of years, but the timing is what has me thinking.

There are still many who believe that this cut is the first of several between now and the end of 2025. However, there is also some trepidation on the part of some in the bond world given the recent rise in inflation after a prolonged period of decline. As a reminder, the Fed does have a dual mandate focused on both employment and inflation, and although the U.S. labor force has shown signs of weakening, is that weakness creating concerns that dwarf the potential negative impact from rising prices? As stated above, there may also have been some that anticipated the Fed surprising the markets by slicing rates by 0.50% instead of the 0.25% announced.

In any case, the interest rate path is not straight and with curves one’s vision can become obstructed. What we might just see is a steepening of the Treasury yield curve with longer dated maturities maintaining current levels, if not rising, while the Fed does their thing with short-term rates. That steepening in the curve is beneficial for cash flow matching assignments that can span 10- or more years, as the longer the maturity and the higher the yield, the greater the cost reduction to defease future liabilities. Please don’t let this attractive yield environment come and go before securing some of the pension promises.

09.22.25
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ARPA Update as of 9/19/25

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

Good morning and welcome to the first full day of Fall. Autumn has always been my favorite season. How about you?

Regarding the implementation of ARPA’s pension legislation by the PBGC, we are now about 3 1/2 months away from the deadline to have all initial applications seeking Special Financial Assistance (SFA) submitted. Unfortunately, there are still dozens of multiemployer pension plans sitting on the PBGC’s waitlist.

Last week witnessed a slower pace of activity, as the PBGC is only reporting the submission of three applications and the repayment of excess SFA by one fund. There were no applications approved, denied, or withdrawn during the previous week. Furthermore, there were no pension funds seeking to be added to the waitlist and none of the plans currently sitting on that list locked-in the valuation date. We may not see any new plans being added to the list given the rapidly approaching deadline for initial application submission. As a reminder, those plans that submit an application before 12/31/25 can submit a revised application until 12/31/26 – the legislation’s deadline.

Pleased to report that Pension Trust Fund Agreement of St. Louis Motion Picture Machine Operators, Teamsters Local 837 Pension Plan, and Iron Workers’ Pension Trust Fund for Colorado each submitted an initial application seeking SFA. These non-Priority Group members are hoping to secure >$30 million for the nearly 3,200 plan participants. As a reminder, the PBGC has 120-days to act on these applications.

Finally, there was one plan asked to rebate a portion of the SFA based on a census error. Western Pennsylvania Teamsters and Employers Pension Fund, a recipient of $994.6 million has agreed to rebate $8.8 million or 0.89% of the grant. To date, 61 multiemployer pension funds have repaid $260.7 million in excess SFA on grants totaling $53.4 billion or 0.49%.

We hope that you have a great week. Check back in next Monday for the next ARPA legislation update.

09.19.25
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Houston, We Have A Problem!

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

That famous phrase from the movie Apollo 13, is actually modified from the original comment spoken by Jack Swigert, the command module pilot, who said, “Okay, Houston…we’ve had a problem here”. In any case, I am not referencing our space program, the City of Houston or for that matter, any other municipality. However, I am acknowledging that we continue to have an issue with how the debt of companies, municipalities, and other government entities get rated and how those rating agencies get compensated.

There was a comment in New Jersey Spotlight News (a daily email newsletter) that stated “New Jersey is facing uncertain economic times, to say the least, but its state government got a vote of confidence from Wall Street this week.” Of course, I was intrigued to understand what this vote of confidence might be especially given my knowledge of the current economic reality facing my lifelong state of residence. It turns out that Moody’s has elevated NJ’s debt rating. Huh?

Moody’s action in raising the rating to Aa3 follows a similar path that S&P took several months ago. Yes, NJ was able to recently close its budget gap by $600 million through tax increases but given that the state has one of the greatest tax burdens of any U.S. state, the ability to further raise taxes is likely significantly curtailed unless they want to witness a mass exodus of residents, including the author of this post!

According to Steve Church, Piscataqua Research, a highly experienced and thoughtful actuary, “New Jersey’s public employees, teachers, police and fire systems are $96B underfunded by reference to their actuaries’ contribution liability calculations and $154B underfunded using their actuaries’ LDROM calculations!” Ouch! Furthermore, they offer an OPEB that is funded at <10%. In addition, New Jersey, like many states, will be negatively impacted by the cuts in Medicaid and other social safety net programs. These cuts are likely to put significant pressure on the state’s budget, which has already risen significantly in just the last 5 years from $38.3 billion in fiscal year 2020 to nearly $60 billion today.

So, how is it possible that NJ could see a ratings increase given the significant burden that it continues to face in meeting future pension and OPEB funding, while also protecting the social safety net that so many Jersey residents are depending on. Well, here’s the rub. Rating agencies are paid under the practice called “issuer-pays”. This process has often been criticized, especially during the GFC when a host of credit ratings were called into question. Unfortunately, few alternatives have been put into practice today. How likely will a municipality or corporate entity pay an agency for a rating that puts the sponsor in a poor light? We’ve been extremely fortunate to have mostly weathered recent economic storms, but as history has shown, there is likely another just around the corner. How will these bonds hold up during the next crisis?

09.19.25
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Dear Plan Sponsor: Please ask Yourself the Following Questions

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

Do you believe that your pension plan exists to meet (secure) a promise (benefit) that was given to the plan’s participants?

Are you factoring in that benefit promise when it comes to asset allocation?

Do you presently have exposure to core fixed income, and do you know where U.S. interest rates will be in the next day, month, year, 5-years?

Has liquidity to meet benefits and expenses become more challenging with the significant movement to alternatives – real estate, private equity, private debt, infrastructure, etc.?

Do you believe that providing investment strategies more time is prudent?

So, if you believe that securing benefits, driving asset allocation through a liability lens, improving liquidity, eliminating interest rate risk, and buying-time are important goals when managing a defined benefit plan, how are you accomplishing those objectives today?

Cash Flow Matching (CFM) achieves every one of those goals! By strategically matching asset cash flows of interest and principal from investment-grade bonds against the liability cash flows of benefits and expenses, the DB pension plan’s asset allocation becomes liability focused, liquidity is improved from next month as far out as the allocation covers, interest rate risk is mitigated for the CFM portfolio, the investing horizon is extended for the remaining assets improving the odds of a successful outcome, and most importantly, the promises made to your participants are SECURED!

How much should I invest into a CFM program? The allocation to CFM should be a function of the plan’s funded ratio/status, the ability to contribute, and the level of negative cash flow (contributions falling short of benefits and expenses being paid out). Since all pension plans need liquidity, every DB pension plan should have some exposure to CFM, which provides the necessary liquidity each month of the assignment. There is no forced liquidation of assets in markets that might not provide natural liquidity.

Again, please review these questions. If they resonate with you, call me. We’ll provide you with a good understanding of how much risk you can remove from your current structure before the next market crash hits us.

09.15.25
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Glorified Savings Accounts!

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

This could happen to any company, so I’m not writing this post to pick on Sherwin-Williams (love their paint), but they just happen to be the latest firm to “temporarily” suspend the matching contribution into the employee 401(k) plan. S-W cited economic conditions, that in many cases are getting worse, for the need to preserve cash at this time. It is also being reported that they did this same thing during the GFC and again in 2020 during Covid. In both cases, they eventually restored full-matching of benefits at 100% on the first 6% contributed by employees.

Again, I’m not picking on Sherwin-WIlliams. But this decision highlights my concerns about 401(k)s in general. It is bad enough that we are asking untrained individuals to fund, manage, and then disburse a “retirement” benefit with little disposable income, investment acumen, or a crystal ball to help forecast longevity, but we also have employers who can suspend, reduce, or eliminate contributions at the drop of a hat.

Few American workers are saving enough to ensure a quality retirement. With general living expenses continuing to rise, the assets needed to enjoy a retirement is getting more significant all the time. When an employer can suspend or amend a contribution level and an employee can suspend contributions, take a loan, switch jobs and cash out a balance, this vehicle is not a retirement account. It is truly a glorified savings account. We need to bring back defined benefit plans as the primary retirement program. DC plans were intended to be supplemental, and given the funding challenges, that’s the lane that they should occupy.