Tag Archives: PBGC

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.

02.18.25
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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.

02.04.25
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Not Crunch Time, But the Program is Nearing Its End

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

I frequently get terrific questions following the publishing of one of my blog posts. Today’s question of the day was related to the ARPA pension legislation. I was asked, “Russ when does this legislation expire and when is the final date that a plans application must be submitted?” Terrific question. I’ve been meaning to provide this information as part of one of my weekly ARPA updates. Thanks for the prompt.

According to the final language in the Bill, ‘‘(f) APPLICATION DEADLINE.—Any application by a plan for special financial assistance under this section shall be submitted to the corporation (and, in the case of a plan to which section 432(k)(1)(D) of the Internal Revenue Code of 1986 applies, to the Secretary of the Treasury) no later than December 31, 2025, and any revised application for special financial assistance shall be submitted no later than December 31, 2026.

Furthermore, “The corporation (PBGC) shall not pay any special financial assistance after September 30, 2030.” As an aside, I’m not quite sure how a “revised” application that must be filed by 12/31/26 would not be paid before 2030 is beyond me, especially given the 120-day window to have an application acted on.

As reported in yesterday’s blog post, of the potential 202 applications, 109 have been approved, 21 are currently under review, while another 21 plans have withdrawn the applications. That leaves 51 plans that have yet to file (remember the 12/31/25 deadline) including a Priority Group 1 fund.

So, despite the terrific effort to date, the PBGC clearly has its work cut out for it. Currently, the eFiling portal to submit applications is closed. The PBGC has been opening and closing access to the filing portal based on its ability to meet the 120-day deadline. They may need to accelerate the pace of submissions and approvals in the coming months in order to complete the process by 12/31/26. Obviously, more to come from the PBGC. Also, keep your questions coming!

01.21.25
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ARPA Update as of January 17, 2025

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

I hope that you enjoyed the long holiday weekend. For many of us on the East coast, the holiday’s days and nights were likely spent inside given the frigid temps. Unfortunately, the upcoming week is not going to provide any weather relief.

However, this should warm your heart, as the PBGC continued to be active implementing the ARPA legislation that is nearing its fourth anniversary (3/11/21). To date, the PBGC has approved the Special Financial Assistance (SFA) for 109 multiemployer plans. The grants have totaled $70.9 billion and 1,528,409 American workers/retirees have had the promised pension benefit protected, and in some cases, restored.

During the last week, the PBGC accepted one new application, as Greendale, WI based United Food and Commercial Workers Unions and Employers Pension Plan filed a revised application seeking $54.3 million for its 15,420 plan participants. In other news, two funds, Cement Masons Local No. 524 Pension Plan and Local 1922 Pension Plan each withdrew their initial application. The two funds were seeking just over $20 million for roughly 2k members. Finally, the Legacy Plan of the UNITE HERE Retirement Fund, a Priority Group 6 member, received approval of its revised application. They have been awarded $868.8 million in SFA and interest that will go to protecting the retirements for 91,744 participants. Congrats!

The PBGC’s eFiling portal is temporarily closed. According to the PBGC’s website, “the PBGC will accept as many applications as the agency estimates it can process within the statutory 120-day review period. When the number of applications under review reaches that level, the application e-Filing Portal will temporarily close until PBGC has capacity to receive more applications.” There are still an estimated 93 funds going through the process of filing applications SFA grants. 

01.13.25
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ARPA Update as of January 10, 2025

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

Welcome to the second full week of January. Although the PBGC’s efiling portal remains temporarily closed, there was still some good activity last week, including the approval of another three applications seeking Special Financial Assistance (SFA). Pleased to report that Laborers’ Local No. 265 Pension Plan, Local 734 Pension Plan, and Upstate New York Engineers Pension Fund each a non-priority group member received approval for their revised applications. In total, they will receive $244.6 million in SFA for the 11,374 plan participants. What an exciting way to begin 2025.

In other news, there was one application withdrawn, Warehouse Employees Union Local 169 and Employers Joint Pension Plan, from Elkins Park, PA, withdrew its initial application seeking nearly $90 million in SFA for just over 3,600 members of the plan.

The 108 funds receiving SFA to date have been awarded grants exceeding $70 billion benefiting the quality of life for more than 1.4 million American workers. There is still much more to do (possibly another 94 funds will get SFA), but the program has already been an incredible success. Finally, US Treasury yields continue to rise, providing pension plans with the wonderful opportunity to further de-risk the SFA assets received and those to come. IG corporate bond yields exceeding 6% are not rare. Let us know how we can help you.

12.30.24
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ARPA Update as of December 27, 2024

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

We, at Ryan ALM, Inc., wish for you a happy, healthy, and prosperous New Year in 2025. May the markets continue to treat you well. However, nothing grows to the heavens, so it may be wise to alter one’s asset allocation and reduce risk as the year begins given inflated valuations, particularly for large cap US equities.

Regarding ARPA and the PBGC’s on-going effort implementing this critical legislation, there was a pause in activity during the last week. Good for them, as 2024 has been an incredibly busy and successful year. Regarding last week, the PBGC’s eFiling portal remains temporarily closed, so there were no new applications filed. There also weren’t any applications denied, withdrawn, or approved. Finally, there were no repayments made by funds that had received excess SFA.

To recap 2024, the PBGC approved 36 applications, awarding more than $16.2 billion in SFA grants that went to support the promised benefits for 458,446 plan participants. WOW! As the chart below highlights, only 15 of the 87 Priority Group members have yet to have the applications for SFA approved. Three of those applications are currently under review. Of the 115 funds seeking support that weren’t initially identified as a Priority Group member, 64 pension plans have participated to some extent in this program with 33 of those applications approved.

US Treasury note and bond yields (longer maturities) have risen sharply in the last few months. They are at levels not witnessed since early this year. As a result, they are providing plan sponsors with a wonderful opportunity to reduce risk without giving up potentially higher returns. We’d be happy to provide a free analysis on what could be achieved within your plan. Don’t hesitate to reach out to us.

Again, Happy New Year!

12.23.24
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ARPA Update as of December 20, 2024

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

Happy Holidays from all of us at Ryan ALM, Inc. We wish you and yours a joyous holiday season and a spectacular 2025 filled with great health, abundant friendships, and calm markets.

Despite the onset of the holiday season, the PBGC was still at work implementing the ARPA legislation. Santa arrived early for one plan, as Roofers Local No. 75 Pension Fund received approval for its SFA grant. They will receive $6.8 million for the 275 plan participants. This was the initial filing for this non-priority group member. Congrats!

In other ARPA-related news, there were no new applications submitted as the PBGC’s efiling portal remains temporarily closed. There are currently 28 applications under review, including one Priority Group 5 member and two Priority Group 6 members. Fortunately, there were no applications denied or withdrawn during the previous week.

Lastly, there was one fund that repaid excess SFA assets due to census errors. Gastronomical Workers Union Local 610 and Metropolitan Hotel Association Pension Fund repaid $696k (or 2.09%) after receiving $33.3 million in SFA. This fund is one of only 3 to repay SFA in excess of 2% of the grant received. In total, $159.3 million has been repaid on grants of more than $41 billion or 0.38% of the allocations.

The Bloomberg chart below demonstrates the significant rise in U.S. rates during the last month. Recipients of SFA funds would be wise to secure the promised benefits with 100% of the grant money. Equity markets appear to be quite frothy. Time to reduce risk, while taking full advantage of the higher interest rates.

12.04.24
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Good Job, PBGC!

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

Did you know that there exists an oversight body for the Pension Benefit Guaranty Corporation (PBGC)? The 1988 amendments to the Inspector General Act of 1978 created the PBGC Office of the Inspector General (OIG) of the PBGC. They are responsible for providing independent and objective audits, inspections, evaluations, and investigations to help Congress, the PBGC Board of Directors, and the PBGC itself to protect pension benefits for both multiemployer and private plans.

The latest report, covering the period April 1-September 30, 2024, has been sent to Congress. The PBGC has received mostly positive results. As a reminder, the PBGC ensures the pension benefits of more than 31 million American workers and retirees who participate in more than 24,500 private-sector pension plans through its single-employer and multiemployer insurance programs. Quite the effort!

Furthermore, as regular readers of this blog know, the PBGC has been engaged since 2021 in implementing the Special Financial Assistance (SFA) program, that was housed in the ARPA legislation. As of September 30, 2024, the report highlights the following stats regarding the PBGC’s effort:

  • received 165 SFA applications requesting $76 billion;
  • approved 127 of the SFA applications; (includes supplemental applications of which there were 35)
  • provided $68 billion in SFA; and
  • was reviewing 22 SFA applications, requesting a total of $2.5 billion.

One area of concern, which seems to have been corrected, was the census data possibly being wrong in the various applications leading to overpayment of SFA grants. According to the OIG report, there could be incorrect census data on applications leading to as much as $250 million in overpayments. To date, the PBGC has recouped $144 million from 19 plans. This sum is a small percentage (<0.5%) of what has been paid out to date.

The OIG says it “determined that the PBGC’s SFA procedures were generally sufficient to ensure that increases in projected benefit payments were (1) consistently identified, (2) evaluated against appropriate criteria, and (3) documented. In addition, the OIG reports that the PBGC responded to its findings and recommendations regarding the SFA program, which is says has significantly improved the PBGC’s SFA procedures.”

According to our analysis, there are potentially 202 applicants seeking SFA grants. With 102 funds having received approval to date, there remains much work is left to be done. There is no time to sit on one’s laurels!