Tag Archives: arpa

04.25.25
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A Call for Pension Reform – Five Years Later

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

On March 25, 2020, I produced a post titled, “Why Pension Reform is Absolutely Necessary“. A few of you may recall that blog. I penned the post in reaction to a series of statistics that my friend John A. produced. John is a retired Teamster and an incredibly important driver behind efforts to reinstate benefits that had been cut under MPRA. John’s analysis was based on a survey that he conducted on multiemployer plans that had roughly 43,000 plan participants impacted by that misguided legislation. That universe of participants would grow to more than 75,000. What he discovered through his polling and outreach was shocking!

Their benefit reductions amounted to nearly $34,000,000 / month.  (That is a ton of lost economic activity.)

95% were not able to work.

72% were providing primary care for an ailing loved one.

65% were not able to maintain healthcare insurance.

60% had lost their home.

55% were forced to file for bankruptcy.

80% were living benefit check to benefit check.

100% of the PBGC maximum benefit payout was inadequate ($12,870 for a retiree with 30-years of work).

50% of the retirees were U.S. service veterans.

Shocked? I certainly was and continue to be that our government allowed the benefits to be cut for hard working American workers who rightfully earned them through years of employment.

Where are we today? Fortunately, the got the passage of ARPA pension reform (originally referred to as the Butch Lewis Act) which was signed into law by President Biden in March 2021. Responsibility to implement the legislation fell to the Pension Benefit Guaranty Corporation (PBGC). In my original blog post, I referred to a potential universe of 125 multiemployer plans that might be eligible for Special Financial Assistance (SFA). That list would eventually become 204 plans (see below).

I’m extremely pleased to announce that 119 funds of the 204 potential recipients have received more than $71.6 billion in SFA and interest supporting the retirements of 1,555,460 plan participants. Awesome! There is still much to do, and hopefully, the sponsors of these funds will prove to be good stewards of the grant $s by conservatively investing the SFA and reserving the risk taking for the legacy assets that have time to wade through challenging markets.

What an incredible accomplishment! So many folks would have been subject to very uncertain futures. The securing of their benefits goes a long way to allowing them to enjoy their retirement years. Unfortunately, there are too many American workers that don’t have a defined benefit plan. In many cases they have an employer sponsored defined contribution plan, but we know how challenging it can be for those participants to fund, manage, and disburse that benefit. For many others, there is no employer sponsored benefit. Their financial futures are in serious jeopardy.

That said, what appeared to be a pipe dream once the U.S. Senate failed to take up the BLA legislation has become an amazing success story. Just think of all the economic activity that has been created through these monthly payments that certainly dwarf the $34 million/month mentioned above. Congrats to all who were instrumental in getting this legislation created and passed!

04.14.25
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ARPA Update as of April 11, 2025

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

For those observing, may you have a good Passover and a Happy Easter. I was busy this past weekend stuffing 220 eggs with goodies for our 11 grandkids! Let’s hope that weather cooperates. I’m not overly confident on that happening given that we actually had snow during the weekend in northern NJ.

With regard to ARPA and the PBGC’s implementation of this critical legislation, three more plans received approval of their applications during the past week. Bricklayers Pension Fund of West Virginia (revised), United Wire, Metal and Machine Pension Plan (initial), and Local 945 I.B. of T. Pension Plan (revised), all non-priority group members, will receive a combined $289.1 million in Special Financial Assistance (SFA), including interest and FA loan repayments. This brings the total number of pension plans receiving SFA to 119 funds and more than $71.6 billion in grants.

There was no apparent activity beyond the approvals mentioned above, as the PBGC’s eFiling portal remains temporarily closed. The prior week also saw no applications withdrawn or denied, no excess SFA repaid, and no new plans added to the waitlist.

Of the 87 pension plans with a priority designation, 74 have now received approval for an SFA grant (85%) – outstanding! The PBGC still has quite a bit of work to do with 85 plans still in the queue for approval. Fortunately, the challenging capital markets have seen U.S. interest rates rise providing plan sponsors recipients of the SFA to realize greater cost savings and extended coverage through cash flow matching strategies. There is little reason to take on unnecessary risk while uncertainty rules the day.

03.31.25
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ARPA Update as of March 28, 2025

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

Welcome to the last update of March. If you are a fan of both Men’s and Women’s college basketball, there wasn’t as much “madness” as usual during the respective tournaments, as all #1 seeds made the men’s Final Four, while only teams seeded either #1 or #2 made the woman’s Final Four. However, these teams should make for a very exciting and competitive games as they conclude. I’m still waiting for Fordham to get there one day.

Now onto the task at hand. Regarding ARPA and the PBGC’s implementation of this critical legislation, last week was fairly busy. Three non-priority group funds, including United Food and Commercial Workers Unions and Participating Employers Pension Plan, Roofers Local 88 Pension Plan, and Chicago Truck Drivers, Helpers and Warehouse Workers Union (Independent) Pension Fund, filed initial applications seeking a total of $241.7 million in Special Financial Assistance (SFA) that will support the promised benefits for 14,769 workers. There are 22 funds that currently have an application before the PBGC.

In addition to the new fillings, Oregon Processors Seasonal Employees Pension Plan, received approval of its revised application. They will receive $19.9 million in SFA and interest to help cover the promised pensions for 7,279 members. There were no applications denied during the previous week, but there were a couple of initial applications from non-priority group members withdrawn. Distributors Association Warehousemen’s Pension Trust and Alaska Teamster – Employer Pension Plan were seeking $206.6 million in SFA for nearly 12,200 participants.

In other ARPA news, the PBGC recouped  $994,701.30 or 1.55% in excess SFA paid by The Newspaper Guild International Pension Plan. The PBGC has now recouped $202.2 million in excess SFA from grants totaling $47.5 billion or 0.42% of the proceeds. These funds, including another 4 that didn’t receive any excess proceeds, were among the roughly 60 that received awards before they were given access to the Social Security’s Master Death File.

Lastly, there was one more multiemployer fund added to the waitlist. The Plasterers Local 79 Pension Plan becomes the 117th plan to be placed on the waitlist. Fortunately, the PBGC has begun the process on all but 45 of those.

03.12.25
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Lessons Learned?

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

My wife and I are rewatching The West Wing, and we are often amazed (disappointed) by how many of the social issues discussed 20 years ago when the show first aired that are still being debated today. It really just seems like we go around in circles. Well, unfortunately, the same can be said about pensions and supposed pension reforms. We need to reflect on what lessons were learned following the Great Financial Crisis of 2007-2009, when pension America saw its funded status plummet and contribution expense dramatically escalate. Have we made positive strides?

Unfortunately, with regard to the private sector, we continued to witness an incredible exodus from defined benefit plans and the continued greater reliance on defined contribution plans, which is proving to be a failed model. That activity appears to have benefited corporate America, but how did that action work for plan participants, who are now forced to fund, manage, and then disburse a “retirement” benefit through their own actions, which is asking a lot from untrained individuals, who in many cases don’t have the discretionary income to fund these programs in the first place.

With regard to public pension systems, we saw a lot of “action”. There were steps to reduce the return on asset assumption (ROA) for many systems – fine. But, that forced contributions to rise rapidly, creating a greater burden on state and municipal budgets that resulted in the siphoning off of precious financial resources needed to fund other social issues. In addition, there was great activity in creating additional benefit “tiers” (tears?), in which newer plan participants, and some existing members, were asked to fund more of their benefit through new or greater employee contributions, longer tenures before retirement, and more modest benefits to be paid out at retirement. Again, I would argue are not pension lessons learned, but are in fact benefit cuts for plan participants.

Fortunately, for multiemployer plans, ARPA pension legislation has gone a long way to securing the funded status and benefits for 110 plans that were once labeled as Critical or worse, Critical and Declining. There are another 90 pension plans or so to go through the application process in the hopes of securing special financial assistance. But have we seen true pension reform within these funds and the balance of plans that had not fallen into critical status?

It seems to me that most of the “lessons learned” have nothing to do with how DB pension plans are managed, but rather asks that plan participants bear the consequences of a failed pension model. A model that has focused on the ROA as if it were the Holy Grail. Pension plans should have been focused on the promise (benefit) that was made to their participants, and not on how much return they could generate. The focusing on a return target has certainly created a lot more uncertainty and volatility. As we’ve been reporting, equity and equity-like exposure within multiemployer and public pension systems was greater coming into 2025 then the levels that they were in 2007. What lesson was learned?

Pension America is once again suffering under the weight of declining asset values and falling interest rates. When will we truly learn that continuing to manage DB plans with a focus on return is NOT correct? The primary objective needs to be the securing of the promised benefits at a reasonable cost and with prudent risk. Shifting wads of money into private equity or private credit and thinking that you’ve diversified away equity exposure is just silly. I don’t know what the new administration’s policies will do for growth, inflation, interest rates, etc. I do know that they are currently creating a lot of angst among the investment community. Bring some certainty to the management of pensions through a focus on the promise is superior to continuing to ride the rollercoaster of performance.

03.03.25
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ARPA Update as of February 28, 2025

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

Welcome to March!

We are pleased to provide you with the latest update on the PBGC’s implementation of the ARPA pension legislation. The last week saw moderate activity, as the PBGC’s eFiling portal was temporarily open providing three funds, Local 810 Affiliated Pension Plan, Aluminum, Brick & Glass Workers International Union, AFL-CIO, CLC, Eastern District Council No. 12 Pension Plan, and Sheet Metal Workers’ Local No. 40 Pension Plan the opportunity to submit revised applications seeking Special Financial Assistance. The PBGC has until June 26, 2025, to act on the applications that combined are seeking $112.6 million in SFA for 3,001 plan participants.

In addition to the above-mentioned filings, one pension fund, Roofers and Slaters Local No. 248 Pension Plan, a Chicopee, MA-based fund, withdrew its initial application that was looking for roughly $8.4 million in SFA for 202 members of the plan. As I said, there was moderate activity last week. Fortunately, no multiemployer pension plans were denied SFA and no other plans repaid excess SFA as a result of census issues. There were also no plans approved or added to the waitlist, which contains the names of 116 plans, of which 47 have yet to submit an application.

As you may recall, I wrote a post last week titled, “A Little Late to the Party!“. The gist of the article had to do with an effort on the part of a couple of Congressmen to get the Justice Department involved in the repayment of any excess SFA funds that have been distributed to the 60 funds that received SFA prior to the use by the PBGC of the Social Security Administrations Death File Master. As I’ve reported, this process is well underway (41 funds have repaid a portion of the SFA to date), having begun back in April with the Central States plan. It is unfortunate that pension plans used to have access to this master file, but that ability was rescinded years ago over privacy concerns. ARPA has been a huge success. The repayment of excess SFA should not taint the tremendous benefit that this legislation has brought.

02.25.25
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A Little Late to the Party!

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

P&I is running a story today about two U.S. Congressmen, Representatives Tim Walberg, R-Mich., and Rick Allen, R-Ga., who have produced a Feb. 20 letter to Attorney General Pam Bondi regarding excess Special Financial Assistance (SFA) payments to multiemployer plans under the ARPA pension legislation that has been implemented/overseen by the PBGC. They are demanding that the Justice Department look into the erroneous payments made to some of the SFA recipients base on incorrect census data.

This issue was first raised by the PBGC’s Office of Inspector General back in November 2023 when they found that while the agency required the pension fund to provide a list of all plan participants and proof of a search for deceased participants, “the PBGC did not cross-check that information with the Social Security Administration’s Death Master File — the source recommended by the Government Accountability Office for reducing improper payments to dead people.” Good catch, PBGC. Clearly, no one wants to see incorrect payments made, but for these Congressman to be encouraging a review at this time seems a little misplaced, as the repayment of excess funds has been ongoing since last April when Central States, Southeast & Southwest Areas Pension Plan repaid $126.7 million representing 0.35% of the SFA grant received.

Since the repayment by Central States, the PBGC has worked diligently with 60 pension plans that received SFA prior to the use of the SSA’s DMF to make sure that any excess SFA is recaptured. As of February 21, 2025, 38 plans have repaid $180 million in excess SFA from total grants paid of $43.6 billion or 0.41%. The 38 plans represent 63% of the cohort that might have received excess grant money. Is the $180 million earth-shattering? No. Will it dramatically impact the Federal budget deficit running at roughly $2 trillion per year? Again, no. Might this unfortunate situation tarnish the huge success that ARPA has been? Unfortunately, it just might.

For these Congressman to only now seek to get the Justice Department involved seems misplaced as nothing more than a political hit job. Instead of creating waves, they should be celebrating the fact that ARPA has helped to secure the rightfully earned retirement benefits for 1.53 million American workers and retirees (oh, and they are taxpayers, too) through nearly $71 billion in SFA grants to date. The amount of economic activity created from these monthly benefits will support local businesses and jobs for years to come. Fortunately, there are still more than 90 multiemployer plans that might yet collect some SFA grant money. Let’s hope that they do.

None of the members of these plans ever wanted to be in a situation where their earned benefits might be slashed or worse, eliminated. Yet, that’s exactly where they found themselves following the passage of MPRA. Thank goodness that ARPA was signed into law in March 2021 before more damage was done to struggling multiemployer funds. I’m not sure that I can point to another piece of pension legislation enacted during my 43-year career that has had such a beneficial impact on our pensioners. Most of what I’ve witnessed is the whittling away of benefits.

02.24.25
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ARPA Update as of February 21, 2025

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

Welcome to the last week in February. Spring can’t arrive soon enough in New Jersey!

Last week the Milliman organization published its annual review of the state of multiemployer pension plans. The news was quite positive, but in digger deeper, it became apparent that the payment of the Special Financial assistance (SFA) was the primary reason for the improved funding ratios. Given how critically important the SFA is to the ongoing success of many of these plans, let’s look at what transpired during the previous week.

According to the PBGC’s weekly spreadsheet, there were no new applications filed as the eFiling portal remains temporarily closed. In addition, no applications were approved or denied, but there was one application withdrawn, as non-priority plan Aluminum, Brick & Glass Workers International Union, AFL-CIO, CLC, Eastern District Council No. 12 Pension Plan (the plan’s name is longer than the fund’s size is large) pulled its application seeking $10.6 million for 580 participants.

There was some additional activity though, as five plans were asked to repay a portion of the previously agreed SFA due to census errors. In total, these plans repaid $16.3 million representing just 1.06% of the grants received. To date, $180.8 million has been reclaimed from grants totaling $43.6 billion or 0.41%.

In other news, we had Bricklayers & Allied Craftworkers Local No. 3 NY Niagara Falls-Buffalo Chapter Pension Plan, added to the waitlist (#116). This is the first addition to the list since July 2024. This plan did not elect to lock-in the interest rate for discount rate purposes, joining a couple other plans that have kept their options open.

We should witness dramatic improvement in the Milliman funded ratio study next year, as about 7% (85 funds) were funded at <60% in 2024. There are currently 94 plans seeking SFA support. If granted, they should all see meaningful improvement in the funded status of their plans. As a result, we could have a situation in which the multiemployer universe becomes fully funded. How incredible. Now, let’s not do something silly from an investment standpoint that would jeopardize this improved funding.

02.21.25
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Milliman’s Multiemployer Study Released

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

Milliman released the 2024 year-end results of its Multiemployer Pension Funding Study (MPFS). The MPFS analyzes the funded status of ALL U.S. multiemployer DB pension plans. As of December 31, 2024, Milliman estimated multiemployer plans have an aggregate funded ratio of 97%, up from 89% as of December 31, 2023. Impressive!

Milliman determined that the improved funded status was largely due to investment gains, but they also highlighted the critical contribution from the special financial assistance (SFA) granted under the ARPA. Milliman highlighted that as of year-end 2024, 102 plans have received nearly $70 billion in SFA funding, including $16 billion paid during 2024. Incredibly, without the support of SFA grants, the MPFS plans’ aggregate funded percentage at year-end 2024 would be approximately 89% or the same as the end of December 2023. As my chart below highlights, as of today, 109 plans have now received $71 billion in SFA grants.

Chart provided by Ryan ALM, Inc.

According to Milliman, “53% (627 of 1,193 plans) are 100% funded or more, and 84% (1,005) are 80% funded or better.” They also highlighted the more challenged members of this cohort, stating that “7% of plans (85) are below 60% funded and may be headed toward insolvency. Many are likely eligible and expected to apply for SFA in 2025.” As the chart above highlights, there still 93 plans going through the process of submitting applications with the PBGC to receive SFA support.

ARPA’s pension reform legislation has clearly been a godsend to many struggling multiemployer plans (roughly 10% of ME plans to date). That said, a review of the universe of all multiemployer plans points to terrific stewardship of the retirement assets on the part of a significant percentage of plans. My one concern is that the use of the return on Asset (ROA) assumption by most of these plans as the discount rate for plan liabilities is overstating the true funded status relative to a discount rate of a blended AA corporate rate used by the private sector. Milliman’s other DB pension plan studies have public sector plans at an 81.2% funded ratio and private plans at 105.8%.

02.18.25
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ARPA Update as of February 14, 2025

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

Credit to the PBGC for not letting Valentine’s Day get in the way of a productive week, as they continue to implement the ARPA legislation, which is quickly approaching its fourth anniversary!

The eFiling portal has been sporadically open since the beginning of the year. Last week they turned the spigot on a little more, as three non-priority group plans submitted applications, including Teamsters Local 277 Pension Fund, Teamsters Local 210 Affiliated Pension Plan and Cement Masons Local No. 524 Pension Plan. In the case of Local 277, this was the initial filing, while the other two submitted revised applications. In total, these three pension plans are seeking $153.2 million in SFA for the nearly 10k participants.

In other news, the checks are no longer in the mail, as Laborers’ Local No. 265 Pension Plan, Local 734 Pension Plan, Upstate New York Engineers Pension Fund, and The Legacy Plan of the UNITE HERE Retirement Fund received the approved SFA plus interest and FA loan repayments. The $800 million gorilla within this group was Unite Here receiving $868.8 million from a total distribution of $1.1 billion. I suspect that the 103,118 members of these plans slept pretty well this weekend knowing that the promised benefits had been secured.

I’m pleased to report that no applications were denied during the past week. In addition, there were no plans required to repay excess SFA on account of census issues. Lastly, there were no new funds seeking inclusion on the waitlist. The chart below highlights where we are in the process. Despite the significant progress to date, there remains quite a bit of work for the PBGC.

Don’t forget, the legislation requires pension funds receiving SFA to rebalance the allocation between fixed income and equities back to 67%/33% one day every 12-months. Given the significant outperformance of equities vis-a-vis bonds plus the monthly benefit payments most likely coming from the fixed income program, there should be some significant rebalancing needs. It seems like a good time to reduce risk and take some profits.

02.11.25
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ARPA Update as of February 7, 2025

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

Welcome to February! I am a day late in reporting on the PBGC’s activity from last week, as I was an instructor at the IFEBP’s Advanced Trustee and Administrator’s Conference. Fortunately, it is in Orlando and not New Jersey, where the weather remains cold, snowy, and wet! For one of the first times in my 43-year professional career I’m hoping for a significant flight delay of perhaps three days!

The PBGC’s eFiling portal is now open but defined as limited. During the previous week there was one new application submitted. The Retail Food Employers and United Food and Commercial Workers Local 711 Pension Plan is seeking $64.2 million in Special Financial Assistance (SFA) for their 25,306 plan participants or $2,538.65 per member, which seemed modest, and in fact it is, as the average SFA payout has been $46,385 per beneficiary on applications that have been approved.

In addition to the one new application, two non-priority plans, Laborers’ Local No. 130 Pension Fund and Pension Plan of the Asbestos Workers Philadelphia Pension Fund each withdrew an initial application. Collectively, they are seeking $72.4 million for 2,124 members.

There were no applications denied or approved during the past week. In addition, there were no plans required to repay an overpayment of SFA due to census errors. There hasn’t been a repayment since December 2024. Finally, there were no plans seeking to be added to the waitlist. There are still 49 plans waiting to submit an initial application to the PBGC.

The U.S. interest rate environment remains favorable for plans looking to defease the pension liabilities with the proceeds from the SFA. Investment-grade corporate bond portfolios are currently producing yields above 5% despite very tight spreads between corporates and the comparable maturity Treasury. Given the elevated valuations for domestic equities, particularly large cap stocks, now is the time to use 100% of the SFA to secure the promises.