Tag Archives: PBGC

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!

12.02.24
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ARPA Update as of November 29, 2024

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

We hope that you had a very enjoyable holiday weekend. Welcome to December. That doesn’t seem possible.

Despite the holiday shortened week, the PBGC was quite busy, announcing that four multiemployer plans had submitted applications seeking Special Financial Assistance (SFA). Those funds included Laborers’ Local No. 91 Pension Plan, Southwestern Pennsylvania and Western Maryland Area Teamsters and Employers Pension Fund, Oregon Processors Seasonal Employees Pension Plan, and The Legacy Plan of the UNITE HERE Retirement Fund. Local 91’s application was its initial attempt at getting the SFA, while the other three submitted revised applications. In total, these four are seeking a total of just over $1 billion for the 102,356 plan participants. A significant majority of the assets being requested and plan members are in the UNITE HERE fund.

With regard to the Teamsters’ plan, they withdrew and then resubmitted the application on November 27th. That plan is hoping to receive $120.7 million in SFA for the 2,759 members of its fund. In other news, two funds received approval for their applications, including Lumber Industry Pension Plan and Local 1034 Pension Plan. Both plans had submitted revised applications. In total, they will get $159.6 million in SFA and interest for 7,155 plan participants. I suspect that the announcement of a successful PBGC approval made for a wonderful Thanksgiving celebration.

Finally, there were no applications denied, no funds repaid excess SFA, and no plans sought to be added to the waitlist at this time, which continues to list 53 non-priority plans that have not yet been allowed to submit an initial application.

The two plans that received approval for the SFA last week brings to 102 the number of plans that have been awarded SFA grants ($69.7 billion) since the program launched in July 2021. There are still 100 plans that may be eligible to receive this special financing.

11.25.24
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ARPA Update as of November 22, 2024 – #100!!!

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

Welcome to Thanksgiving Holiday week. We wish for you and your family a day filled with love, laughs, and lots of great eating. I wish for myself a TV blackout so that I don’t have to watch the Giants!

We are thrilled to report that the PBGC has approved the Special Financial Assistance (SFA) for the 100th multiemployer plan. Employers’ – Warehousemen’s Pension Plan, a Los Angeles, CA, based non-priority plan will receive $41.4 million in SFA grants and interest for its 1,821 plan participants. The PBGC has now approved grants in the amount of $69.5 billion. By our estimate, there are still 102 funds in the queue to potentially receive an SFA allocation. Clearly, there is much more to do.

In other news from last week, Laborers’ Local No. 265 Pension Plan was permitted to submit a revised application seeking just over $55 million to support its 1,460 members. Rounding out the week, there were no applications denied or withdrawn. There were no excess SFA funds returned. Finally, no pension funds sought to be added to the waitlist, which currently has 58 funds waiting to submit an initial application.

As we enter the Thanksgiving holiday week, let us be incredibly thankful for how beneficial the ARPA legislation has been for the 1,414,505 plan participants who have seen their promised benefits SECURED. For many of these pensioners who were in pension plans on the verge of collapse, the securing of these benefits through the SFA grants has been the difference between supporting oneself or being at the mercy of the Federal social safety net through no fault of their own. The nearly $70 billion may seem like a steep price to pay to some, but it is far less expensive than the cost of a pay-as-you-go system to support those 1.4 million American workers who buy goods and services with their pension checks. We all benefit from that activity. Great job ARPA and the PBGC.