Tag Archives: multiemployer-plans

06.03.24
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ARPA Update as of May 31, 2024

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

Welcome to June and the latest update on the PBGC’s effort to implement the ARPA pension legislation. There isn’t much to report, but I’m happy to mention that two plans received approval of the SFA applications.

Maryland Race Track Employees Pension Plan and the Radio, Television and Recording Arts Pension Plan were granted approval for SFA totaling $89.6 million. Both plans were categorized as non-priority funds. In the case of the Maryland Race Trace Employees, they are galloping toward receiving $26.7 million for the 1,407 plan participants, while the Radio, Television and Recording Arts will no longer have to perform for their benefits as they will get $62.8 million for the plan’s 516 participants or roughly $121 K per participant.

The only other reported activity had the Carpenters Pension Trust Fund – Detroit & Vicinity pulling its application that was seeking $595.5 for more than 22,000 members of the plan. This non-priority plan from Troy, MI, pulled its initial application. There were no new applications filed or rejected. No plans were added to the waitlist and no pension funds returned excess SFA assets.

June looks to be shaping up as a busy month for the PBGC, as there are nine funds that have approval dates this month, including the Bakery and Confectionery Union and Industry International Pension Fund, that is seeking nearly $3.2 billion in SFA. In total, the nine funds are hoping to gather more than $6 billion in grants for 233,845 participants. Six of the nine funds are waiting to get approval from the PBGC on revised applications. Good luck.

05.28.24
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ARPA Update as of May 24, 2024

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

I hope that you enjoyed a long, restful weekend. Our thoughts and prayers are with all of the US service men and women who gave the ultimate sacrifice to enable the rest of us to continue to enjoy our freedom.

With respect to the ARPA legislation and the PBGC’s yeoman effort to implement, there was some activity last week. In fact, there were three plans that filed applications and one that received approval. Local Union No. 226 International Brotherhood of Electrical Workers Open End Pension Trust Fund, Local 1783 I.B.E.W. Pension Plan, and the Pressroom Unions’ Pension Plan each filed its initial application45 last week seeking SFA. The three plans are non-priority group members and in total they have asked for $127.4 million for just over 3,400 plan participants.

Happy to report that the UFCW Regional Pension Fund received approval for its application. The non-priority fund will receive $54.5 million, including interest, for its 4,605 participants. This bring the # of approved applications to 73 and a total of $52.2 million in final SFA amount approved including interest and FA loan repayments. There was no other activity report including applications denied, excess SFA repaid, plans added to the waitlist or plans on the waitlist setting a lock-in date for valuation purposes.

There is the possibility that 128 additional plans may receive SFA before the legislation expires. This total includes those under review, those plans that have withdrawn and not refiled, and finally, those plans on the waitlist that have yet to file the initial application.

05.06.24
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ARPA Update as of May 3, 2024

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

Welcome to May! The PBGC has now been implementing the ARPA legislation since July 2021. Great strides have been made since Local 138 Pension Trust Fund received the first approval for the SFA grant ($112.6 million) on December 21, 2021. The grant proceeds were ultimately awarded on January 14, 2022. There have been another 71 funds to receive approval for their SFA applications ($53.8 billion in SFA) with another 129 currently awaiting action on their applications. Thats a huge effort to-date and a greater one to come.

That said, there must have been a big celebration at the PBGC for Cinco de Mayo this past weekend, as there were no new applications received, denied, approved, withdrawn, or excess proceeds repaid during the previous week. Furthermore, there were no pension systems looking to be added to the waitlist, which currently has 108 systems seeking approval from the original 114 on the list. Of course I’m being facetious about the PBGC’s celebration as they have already accomplished a lot, but there remains a ton to do before the legislation reaches its termination date.

I am attending and speaking at the IFEBP’s legislative conference in Washington DC beginning today, and I hope to gather some intel on anything related to ARPA’s pension reform and future actions. I’ll report back on any interesting tidbits. Have a great week.

04.29.24
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ARPA Update as of April 26, 2024

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

Can you believe that a 1/3 of 2024 will soon be behind us? It is finally feeling like Spring in NJ today.

There is not much to discuss regarding the PBGC’s implementation of the ARPA pension legislation. According to the latest update, there were no new applications filed, approved, denied, or withdrawn. However, there was one fund that received the SFA. United Food and Commercial Workers Union Local 152 Retail Meat Pension Plan, a Mount Laurel, NJ, plan received SFA and interest in the amount of $279.3 million for the more than 10k plan participants.

There currently are 114 names on the waitlist. Of those, 27 have been invited to submit applications. As the data above reflects, 8 of those applications have been approved, 12 are currently under review, while another 7 have been withdrawn presumably to have the submission corrected and resubmitted. In addition to that activity, 112 of the 114 funds have locked-in a valuation date for SFA measurement (discount rate). Ninety-two percent of those chose 12/31/22, while 2 have no lock-up and the other 9 have chosen dates between December 31, 2022 and November 30, 2023. As a reminder, the SFA is based on a series of discount rates. The lower the rate, the greater the potential SFA. Using the 10-year Treasury yield as a proxy for the discount rate, those plans locking in an evaluation date as of year-end 2022 have done alright, as the yield at the end of 2022 was 3.88%, while it currently stands at 4.63% (4/29 at 3:39 pm).

We’ll have to see if the others have faired as well. In the meantime, the higher US interest rates have certainly helped from an investment standpoint, as the current environment is providing 5%+ YTM investment grade bond portfolios. The higher rates reduce the cost of those future promises while extending the coverage period to secure benefits through a cash flow matching investment strategy.