Tag Archives: arpa

10.21.24
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ARPA Update as of October 18, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

Major League baseball finally has the last two competitors for this year’s World Series. As a Mets’ fan, I would have appreciated a different outcome, but it was a surprisingly good season for the team from Flushing! Good luck to the Yankees and Dodgers.

With regard to ARPA and the PBGC’s effort to implement this important pension legislation, last week provided just a couple of updates for us to digest. There were no new applications submitted, approved or denied. The PBGC’s eFiling Portal remains temporarily closed at this time. There were also no new systems seeking to be added to the waitlist at this time.

There was one application withdrawn. PA Local 47 Bricklayers and Allied Craftsmen Pension Plan, a non-priority group plan, withdrew its initial application last week that was seeking $8.3 million for the 296 participants in the plan.

The last bit of activity to discuss relates to the repayment of excess SFA as a result of census corrections. Teamsters Local Union No. 52 Pension Fund became the 22nd plan to repay a portion of their SFA received. In the case of Local No. 52, they repaid $1.1 million, which represented 1.15% of their grant. The largest repayment to date has been the $126 million repaid by Central States (0.35% of grant). In terms of percentages, the Milk Industry Office Employees Pension Trust Fund returned 2.36% of their grant marking the high watermark, while Local Union No. 466 Painters, Decorators and Paperhangers Pension Plan, was asked to return only 0.11% of their reward.

Finally, US interest rates have risen significantly since the Fed’s first rate cut on September 18th, as highlighted in the graph below. The higher rates reduce the present value of those future benefit payments and helps to stretch the coverage period provided by the SFA.

10.15.24
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ARPA Update as of October 11, 2024

By: Russ Kamp, Ryan ALM, Inc.

I hope that you enjoyed a wonderful holiday weekend. Autumn’s beautiful colors are finally present in the Northeast – enjoy those, too. As you will soon read, the PBGC had a busy week according to its latest update, so the extra day of rest was likely necessary.

The PBGC’s effort implementing the ARPA legislation continues in full swing. During the prior week there were three new applications received, two approved, another 2 withdrawn, and finally there were two more plans rebating excess SFA as a result of census corrections. Thankfully, there were no applications rejected. Lastly, there were no multiemployer plans seeking to be added to the waitlist (non-Priority Group members).

The plans receiving approval included Midwestern Teamsters Pension Plan and the Carpenters Pension Trust Fund – Detroit & Vicinity. The Carpenters nailed a $635.0 million SFA grant for its 22,576 participants, while the much smaller Midwestern Teamsters plan received $23.6 for 615 members. The PBGC has now awarded $68.6 billion in SFA grants to 94 pension systems.

Sheet Metal Workers’ Local No. 40 Pension Plan, Warehouse Employees Union Local 169 and Employers Joint Pension Plan, and Local 111 Pension Plan were granted the opportunity to submit requests for SFA grants. In the case of Local 111, they submitted a revised application. They are collectively seeking $124,7 million for 6,193 plan members. Good luck! In other news, the Teamsters Local 210 Affiliated Pension Plan and Local 111 Pension Plan withdrew their initial applications. These two funds were seeking $137.3 million collectively.

Finally, Milk Industry Office Employees Pension Trust Fund and Local 805 Pension and Retirement Plan rebated excess SFA grant money as a result of a census audit that confirmed overpayment. The Milk Industry delivered $193k (2.4% of the SFA received) to the PBGC, while Local 805 forked over $3.2 million (1.8% of the grant). Both represented a larger percentage of the SFA received than the previous transactions. At this time, 21 plans have returned $147.5 million in SFA and interest representing 0.37% of the grants received.

I hope that you find these updates useful. I remain incredibly bullish regarding the ARPA legislation and the positive impact that it continues to have on the American worker that earned this pension promise. Please don’t hesitate to reach out to Ryan ALM with any questions related to the legislation and what should be done to secure the promised benefits with the SFA grant assets.

10.07.24
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ARPA Update as of October 4, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

Welcome to October. It is always a beautiful time of year in New Jersey.

With regard to the PBGC’s implementation of the ARPA legislation, there was some activity last week. After a short pause in accepting applications, the PBGC accepted two initial applications from two non-Priority Group members. Cement Masons Local No. 524 Pension Plan and the Roofers Local No. 75 Pension Plan, both Ohio-based, filed applications seeking $11.3 million combined in SFA for 486 plan participants. As a reminder, the PBGC has 120 days to act on those applications.

In addition to the 2 new applications, the PBGC recouped another $1.2 million in SFA overpayments due to census errors. This brings the repayment to of excess SFA to $144.1 million for 19 plans. The recovery of SFA amounts to 0.37% of the grant monies awarded. In other news, there were no applications approved, denied or withdrawn during the last week. There also were no funds seeking to be added to the waitlist.

As the chart above highlights, there are 110 funds yet to have applications approved. US Treasury yields are once again on the rise after a dramatic retreat as bond investors plowed into bonds anticipating very aggressive rate cuts by the Federal Reserve. Higher rates reduce the PV cost of those FV payments of benefits and expenses. A defeasement strategy significantly reduces interest rate risk as FVs are not interest sensitive. As we’ve discussed on many occasions, using a cash flow matching strategy to meet those benefits and expenses reduces the uncertainty associated with a traditional benchmark relative fixed income product. We are happy to discuss this subject in far greater detail.

09.30.24
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ARPA Update as of September 27, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

Welcome to the last update for September 2024. Let’s hope that today brings at least one Mets’ win in Atlanta. It would mark quite the turnaround from where this team was on June 1st.

With regard to the PBGC’s implementation of the ARPA legislation, the efiling portal still remains temporarily closed. As a result, new applications have not been forthcoming. There are presently 22 applications with the PBGC. Sixteen of those must be acted on by November 30th.

Activity was fairly limited during the past week. There were no applications approved or denied. There was one application withdrawn. Bricklayers Pension Fund of West Virginia withdrew the initial application seeking $1.2 million for the 170 plan participants. In addition, 3 funds repaid a portion of the SFA grant received. Mid-Jersey Trucking Industry and Teamsters Local 701 Pension and Annuity Fund, the Pension Plan of the Bakery Drivers and Salesmen Local 194 and Industry Pension Fund, and the Building Material Drivers Local 436 Pension Plan each returned a portion of the overfunding due to incorrect census data. In total, the three plans returned $2.7 million from the $348.3 million received in SFA or 0.78%. To date, 17 plans have returned $142.3 million or 0.36% of the grant monies received. Lastly, there were no additional plans seeking to be added to the waitlist, which remains at 68.

Please don’t hesitate to reach out to us with any questions that you might have regarding investment strategies for the SFA assets. We are always willing to model your plan’s forecasted cash flows so that various implementations can be reviewed.

09.23.24
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ARPA Update as of September 20, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

Welcome to Autumn! It has always been my favorite season since I was a young boy. I would often listen to NY Giants football on the radio as I spent Sunday afternoons outside in the crisp fall air while raking leaves or lying in a freshly created pile. Unfortunately, the Giants weren’t very good in the ’60s and ’70s. I guess what goes around comes around.

I knew that this day would come since I publish an update on the weekly activity associated with the ARPA pension legislation. There was no obvious activity by the PBGC last week. In their latest update, the PBGC is not reporting any new applications received (the efiling portal remains temporarily closed), no applications were approved, denied, or withdrawn, no plans repaid a portion of the SFA due to census errors, and finally, no multiemployer plans sought inclusion on the waiting list. Oh, well. Even the PBGC needs a rest once in a while.

Perhaps the PBGC was focused on the Fed’s interest rate policy decision like the rest of us. So, I’ll take advantage of the clean slate and use my weekly update to summarize where we are at this stage of the PBGC’s implementation of the ARPA pension legislation which began in July 2021. To date, 92 multiemployer plans have received Special Financial Assistance totaling $68.0 billion in grants (inclusive of supplemental awards, interest, and FA Loan Repayments). Of the 92 approved applications, 38 (41.3%) were the initial application attempt. There has been only one plan that had its application denied for ineligibility. Bakery Drivers Local 550 and Industry Pension Fund had its initial application denied in January 2023. A subsequent application was withdrawn in July 2023.

There are currently 23 applications before the PBGC. Five of those 23 will have the 120-day review period elapse in October. There is still one Priority Group 1 member that hasn’t filed an application out of the 30 funds identified as Priority Group 1 eligible. In addition, there are currently 18 applications that were withdrawn that have yet to refile. As I’ve previously reported, 14 funds have repaid a portion of the SFA received because of overpayment due to incorrect census data. There may be more to come.

The Waitlist had 115 multiemployer plans at one time. Twenty-one of those plans have received SFA grants, another 21 are presently under review, while five applications were withdrawn and not refiled. That leaves 69 plans that have yet to get PBGC approval to submit the initial application. While last week may have been “quiet” for the PBGC from an external point of view, a tremendous effort has been put forth to get to this point with potentially lots more to go.

09.16.24
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ARPA Update as of September 13, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

Will it be 25 or 50? That is the big question on nearly every investor’s mind this week. Will the Federal Open Market Committee cut rates by 0.25% or 0.5% on Wednesday. Any cut would mark the first such move by the Federal Reserve since 2020. Despite the uncertainty as to the Fed’s potential action, the PBGC was undaunted as they had another busy week implementing the ARPA pension legislation.

There is plenty to highlight from last week’s activity, as three funds received approval of their applications seeking Special Financial Assistance (SFA), one fund repaid a portion of its SFA grant, while another withdrew its initial application. There were no applications filed this past week as the PBGC’s filing portal is temporarily closed. Multiemployer plans seeking SFA may still “request to be placed on the waiting list in accordance with the instructions in PBGC guidance.”

The three funds receiving SFA were Teamsters Local Union No. 469 Pension Plan, Pension Plan Private Sanitation Union, Local 813 I.B. of T., and Local Union No. 226 International Brotherhood of Electrical Workers Open End Pension Trust Fund. These funds were each non-Priority Group members and the applications were the initial filings for each. In total, these pension plans will receive $238.3 million in SFA and interest for just over 6k members.

Local 1783 I.B.E.W. Pension Plan, an Armonk, NY non-Priority Group member, withdrew its initial application. They were seeking $42.2 million in SFA for the 850 plan participants. The Alaska Iron Workers Pension Plan received approval for its application in January 2023. They have just agreed to return $384,111.74 from the $53.5 million received in February 2023, as a result of a census error. This is the fourteenth plan to return a portion of the SFA due to overpayment.

As one can see, the PBGC has approved 92 of a potential 202 applications (45.5%) at this time for a total of $68 billion in SFA, including interest FA loan repayments. As a reminder, plans receiving SFA proceeds must keep those separated from the plan’s current fund (legacy assets). Despite the recent decline in US interest rates, defeasing benefits and expenses as far into the future as the SFA grant will cover is still the proper course of action. I produced a post last Friday on the correct approach to cash flow matching for those considering such a strategy.

07.29.24
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ARPA Update as of July 26, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

The “dog days” of summer don’t seem to be impacting the activity level at the PBGC, as we had a plethora of activity last week. As mentioned on the PBGC website, the e-filing website is open, but limited. “The e-Filing Portal is open only to plans at the top of the waiting list that have been notified by PBGC that they may submit their applications. Applications from any other plans will not be accepted at this time.” That’s interesting, as there are still 16 pension plans in Priority Groups 1-6 that have potential applications that are not currently being reviewed. Are they excluded, too?

During the week, three funds that had been on the waitlist submitted applications, including, Local 810 Affiliated Pension Plan, the Upstate New York Engineers Pension Fund, and the Alaska Plumbing and Pipefitting Industry Pension Plan. They are seeking a total of $282.1 million for the 9,620 plan participants. This is each plan’s initial submission. As always, the PBGC has 120 from the filing date to conclude the review.

In other news, two plans received approval of their applications, including the Pension Plan of the Moving Picture Machine Operators Union Local 306, a Priority Group 5 member, and the New England Teamsters Pension Plan, that was a Priority Group 6 member. The Moving Picture machinists will receive $20.7 million to support its 542 members, while the NE Teamsters get a whopping $5.7 billion for just over 72k participants. With these latest approvals, the PBGC has now granted through ARPA $67.7 billion in Special Financial Assistance (SFA) that will support the financial futures of 1.34 million American retirees.

On July 23, the Production Workers Pension Plan was added to the waitlist, becoming the 115th member on that list, with 47 having seen some activity (approved, under review, or withdrawn) regarding their applications. In other news, there were no applications denied or withdrawn. Furthermore, none of the previous SFA recipients were asked to repay a portion of the grant due to overpayment. Have a great week, and don’t hesitate to reach out to us if we can provide any assistance to you as you think through your investment strategy as it relates to the SFA grant.

07.22.24
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ARPA Update as of July 19, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

After a very hectic June, in which the PBGC approved nine applications for SFA, July has seen a replenishing of submitted applications seeking SFA grant money with 9 being filed in the first three weeks of the month. In the last week alone, we had Local 734 Pension Plan, Teamsters Local 210 Affiliated Pension Plan, Pension Plan of the Marine Carpenters Pension Fund, and the Pension Plan of the Automotive Machinists Pension Trust submit applications seeking nearly $411.5 million for the combined 20,111 plan participants.

There is really nothing else of note to those of us on the outside of this process. According to the PBGC’s website, there were no applications for SFA approved or denied in the previous week. No funds were asked to return excess payments, no multiemployer plans were added to the waitlist, and no applications were withdrawn.

There are still 16 funds with Priority Group standing (1-6) that are not currently under review, including 1 Priority Group 1 member that hasn’t filed an initial application, while all the others have withdrawn at least initial applications. In addition, there are still 71 waiting list applicants that have not yet submitted an initial application. Despite the successful implementation of ARPA to date, the PBGC still has a ton of work to do.

07.15.24
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ARPA Update as of July 12, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

Not only has the weather heated up, but so has the activity at the PBGC as it relates to the implementation of the ARPA pension legislation. During the past week two non-priority group plans submitted applications. In the case of the Carpenters Pension Trust Fund – Detroit & Vicinity, it was a revised application seeking nearly $600 million in Special Financial Assistance (SFA), while the Laborers’ Local No. 265 Pension Plan put forward its initial filing seeking $55.6 million. In total, more than 24,000 plan participants would enjoy a more secure retirement with the approval of these applications.

In other ARPA news, the American Federation of Musicians and Employers’ Pension Plan finally received approval. This fund had multiple filings throughout the process, which began on March 10, 2023 with the initial filing followed by two other applications. The wait was certainly worth it, as they will receive >$1.5 billion to reinforce the pensions of nearly 50,000 eligible participants.

There were no applications denied during the past week, but one fund, the United Food and Commercial Workers Union and Participating Food Industry Employers Tri-State Pension Plan, withdrew its application that had been seeking $638.3 million in SFA for 29+k members. There were no plans that were forced to repay excess SFA assets and no new plans added to the waitlist.

We’ve all heard the phrase with uncertainty comes opportunity, and that may very well be true, but the uncertainty comes with a certain level of risk, too. Given all of the uncertainty in the economic and political spheres at this time, is the opportunity greater than the risk? We would encourage plan sponsors of all plan types to look to reduce some of the risk in their funds, especially given the elevated multiples on which the equity markets are currently trading. The higher US interest rates are providing a unique opportunity not available to us in the past two decades. Secure some of the promises (benefits) by defeasing your liabilities through a cash flow matching strategy. We are happy to discuss this suggestion in far greater detail or you can go to RyanALM.com to read myriad research articles and blog posts on the subject.

07.01.24
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ARPA Update as of June 28, 2024 – A Time to Celebrate!

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

As we complete the first half of 2024 and get ready for the Fourth of July celebrations with family and friends, we believe that it is fitting to celebrate the success to date of the ARPA pension legislation and the PBGC’s implementation that has positively impacted so many Americans. Here are the highlights:

ARPA’s Special Financial Assistance has been awarded to 84 plans to date.

Those 84 pension plans are responsible for >1.2 million American Workers, who now have their promised retirement benefit secured.

The 84 multiemployer plans have received roughly $60.4 billion in SFA to date.

Furthermore, there are roughly another 115-120 pension plans that might be eligible to receive the SFA before the program comes to its end. Just think of all those hard-working Americans who might have lost a significant % of their benefit, if not the whole promise, through no fault of their own. Congratulations, to all involved in creating and implementing this incredible legislation.

Despite all of the success of this program to date, there is much still to be done. During the previous week, the PBGC allowed two pension plans to file applications for SFA grants, including I.B.E.W. Pacific Coast Pension Fund and Midwestern Teamsters Pension Plan, with each submitting its initial application. In total, these two funds are looking for about $91.7 million in SFA proceeds for just under 4,000 plan participants. The PBGC will now have 120 days to act on these requests.

In other ARPA news, the Kansas Construction Trades Open End Pension Trust Fund received approval of its revised application. They will receive $43.1 million for the 8,145 participants in their program. There were no applications denied or withdrawn, and no funds were forced to repay excess SFA grants. Lastly, no new funds have been added to the waitlist.

We wish for you a wonderful Fourth of July holiday. Please remember those that sacrificed so much so that we can celebrate the independence and freedom that we enjoy in this country. Stay safe.