Tag Archives: Retirement

08.04.25
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ARPA Update as of August 1, 2025

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

Talk about jumping out of the frying pan into the fire! I left New Jersey’s wonderful heat and humidity only to find myself in El Paso, TX, where the high temperature is testing the limits of a normal thermometer. Happy to be speaking at the TexPERS conference this week, but perhaps they can do an offsite in Bermuda the next time.

Regarding the ARPA legislation and the PBGC’s implementation of this critical pension program, we continue to see the PBGC ramp up its activity level. This past week witnessed five multiemployer plans submitting applications of which four were initial filings and the fifth was a revised offering. Another plan received approval, while one fund added its name to the waitlist. Finally, two funds have locked-in the measurement dates (valuation purposes).

Now the specifics: The four funds submitting initial applications were Colorado Cement Masons Pension Trust Fund, Iron Workers-Laborers Pension Plan of Cumberland, Maryland, Cumberland, Maryland Teamsters Construction and Miscellaneous Pension Plan, and Exhibition Employees Local 829 Pension Fund that collectively seek $50.8 million in SFA for their 1,260 plan participants. This week’s big fish, UFCW – Northern California Employers Joint Pension Plan, a Priority Group 6 member, is seeking $2.3 billion for its 138.5k members.

The plan receiving approval of its application for SFA is Laborers’ Local No. 130 Pension Fund, which will receive $33.3 million in SFA and interest for its 641 participants. In an interesting twist, Laborers’ Local No. 130 Pension Fund, has added the fund to a growing list of waitlist candidates. If the Laborers name seems to resemble the name of the recipient of the latest SFA grant you wouldn’t be wrong. I was as confused as you are/were until I realized that these entities have different that there are two different EIN #s.

Happy to report that there were no applications withdrawn, none denied, and no SFA recipients were asked to return a portion of the proceeds due to incorrect census information. However, there are still 119 funds going through the process. There is a tremendous amount of work left to be done at this time. This comes on the heels of 131 funds being approved for a total of $73.4 billion in SFA and interest supporting the retirements for 1.77 million American workers/retirees. What an incredible accomplishment!

07.21.25
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ARPA Update as of July 18, 2025

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

I have the pleasure of drafting this post from beautiful Newport, RI, where I’m attending and speaking at the Opal Public Fund Forum East. The West forum’s location wasn’t too shabby either as it took place in Scottsdale last January! Business travel isn’t as glamorous as those who don’t travel think, but there are some nice perks, too. As they say in real estate: location, location, location!

With regard to ARPA, since you likely didn’t decide to open post this to find Waldo or Russ, the PBGC was fairly busy during the previous week, as there was one new application, one approved application, two new additions to the waitlist and two funds that locked-in their measurement date. Now the details.

I’m pleased to report that the Roofers Local 88 Pension Plan, a Canton OH-based fund, has filed a revised application seeking $9 million for their 484 participants. As usual, the PBGC has 120-days to act on the application or it is automatically approved. In addition, Union de Tronquistas de Puerto Rico Local 901 Pension Plan, a San Juan, PR-based fund, a Priority Group One member will receive $49 million in SFA and interest for the 3,397 members.

In other news, Local 400 Food Terminal Employees Pension Trust Fund and the Textile Processors Service Trades Health Care Professional and Technical Employees International Union Local No. 1 Pension Fund (that name is a mouth full) have both added their funds to the PBGC’s waitlist for the submission of an SFA application. Good luck. There were also two funds from the waitlist, Iron Workers Local 473 Pension Plan and Greenville Plumbers and Pipefitters Pension Fund have locked in their measurement date and both chose April 30, 2025.

Lastly, there were no applications denied or withdrawn, and none of the previous SFA recipients were asked to rebate a portion of their proceeds due to census errors. As reported previously, the PBGC has their work cut out for them, as all of the outstanding applications need to be filed by year-end.

06.20.25
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Why? – Revisited

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

My 44-year career in the investment industry has been focused on DB pension plans, in roles as both a consultant and an investment manager (I’ve also served as a trustee). I’ve engaged in 000s of conversations related to the management of DB pension plans covering the good, the bad, and even the ugly! I’ve published more than 1,600 mostly pension-related posts on this blog with the specific goal to provide education. I hope that some of my insights have proven useful. Managing a DB pension plan, whether a private, public, or a multiemployer plan is challenging. As a result, I’ve always felt that it was important to challenge the status quo with the aim to help protect and preserve DB pensions for all.

Unfortunately, I continue to think that many aspects of pension management are wrong – sorry. Here are some of the concerns:

  • Why do we have two different accounting standards (FASB and GASB) in the U.S. for valuing pension liabilities?
  • Why does it make sense to value liabilities at a rate (ROA) that can’t be purchased to defease pension liabilities in this interest rate environment?
  • Why do we continue to create an asset allocation framework that only guarantees volatility and not success?
  • Why do we think that the pension objective is a return objective (ROA) when it is the liabilities (benefits) that need to be funded and secured?
  • Why haven’t we realized that plowing tons of plan assets into an asset class/strategy will negatively impact future returns?
  • Why are we willing to pay ridiculous sums of money in asset management fees with no guaranteed outcome?
  • Why is liquidity to meet benefits an afterthought until it becomes a major issue?
  • Why does it make sense that two plans with wildly different funded ratios have the same ROA?
  • Why are plan sponsors willing to live with interest rate risk in the core bond allocations?
  • Why do we think that placing <5% in any asset class is going to make a difference on the long-term success of that plan?
  • Why do we think that moving small percentages of assets among a variety of strategies is meaningful?
  • Why do we think that having a funded ratio of 80% is a successful outcome?
  • Why are we incapable of rethinking the management of pensions with the goal to bring an element of certainty to the process, especially given how humans hate uncertainty?

WHY, WHY, WHY?

If some of these observations resonate with you, and you are as confused as I am with our current approach to DB pension management, try cash flow matching (CFM) a portion of your plan. With CFM you’ll get a product that SECURES the promised benefits at low cost and with prudent risk. You will have a carefully constructed liquidity bucket to meet benefits and expenses when needed – no forced selling in challenging market environments. Importantly, your investing horizon will be extended for the growth (alpha) assets that haven’t been used to defease liabilities. We know that by “buying time” (extending the investment horizon) one dramatically improves the probability of a successful outcome.

Furthermore, your pension plan’s funded status will be stabilized for that portion of the assets that uses CFM. This is a dynamic asset allocation process that should respond to improvement in the plan’s funded status. Lastly, you will be happy to sit back because you’ve SECURED the near-term liquidity needed to fund the promises and just watch the highly uncertain markets unfold knowing that you don’t have to do anything except sleep very well at night.

06.13.25
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One Can Only Hope!

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

The title of this post could be used to discuss any number of uncertainties that we are currently facing including geopolitical risk, economic risks associated with potentially disruptive policies, to the economic burdens faced by many Americans. I’ve chosen to apply this title to the prospect that America’s sponsors of defined benefit plans may not be offloading those pension liabilities with the rapidity that they’ve shown in the last decade or so.

There recently appeared an article in PlanSponsor titled, “Fewer Plan Sponsors Terminating DB Plans Amid Risk Management Shifts”. Again, one can only hope that this trend continues. “Half of plan sponsors do not intend to terminate their DB plans, up from 36.7% in 2023 and 28.3% in 2021, according to Mercer’s 2025 CFO Survey,” The survey was based on response from 173 senior finance officers. Unfortunately, it doesn’t undo the harm wrought by all the previous DB terminations, but it is still wonderful news for the American workforce!

As I’ve reported previously, Milliman’s monthly index of the Top 100 corporate plans currently shows a 104.1% funded ratio. Managing surplus assets is now the focus for many of these pension plans. Generating pension earnings, as opposed to living with the burden of pension expense will change one’s perspective. In Ron Ryan’s excellent book, titled, “The U.S. Pension Crisis”, he attributes a lot of the crisis to the accounting rules. For many corporations, pension expenses became a drag on earnings. Sure, they might have said that the company’s primary focus was manufacturing XYZ product and not managing a pension, but the costs associated with managing a DB plan certainly weighed heavily on the decision to freeze, terminate, and eventually transfer the plan.

Now that companies are sitting with a surplus leading to pension earnings, they are reluctant to shift those assets to an insurance company. According to the Mercer survey “70.1% reporting they have implemented dynamic de-risking strategies, an increase of nearly 10 percentage points from 2023. Additionally, 44% have boosted allocations to fixed-income assets to stabilize their funded status.” Let’s hope that they just haven’t engaged a duration strategy to mitigate some of the interest rate sensitivity. As we’ve stated, cash flow matching is a superior strategy to duration matching as every month of the coverage period is duration matched and you get the liquidity as a bonus to meet monthly distributions. Moreover, the Ryan ALM model will outyield ASC 715 discount rates which should enhance pension income or reduce pension expense.

Clearly, this is a positive trend, but we are far from out of the woods in preserving DB pensions. Unfortunately, plan sponsors are still considering risk transfers which continue to “dominate strategic discussions”, as more than 70% of organizations plan to offer lump-sum payments to some portion of their plan beneficiaries in the next two years.” The American workforce is far more interested these days in securing their golden years and a DB plan is the best way to accomplish that objective.

05.29.25
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Union Wins NEW Defined Benefit Pension!!

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

Anyone who reads this blog knows that we at Ryan ALM, Inc. are huge proponents of defined benefit (DB) plans. We promote the use of DB plans as the only sensible retirement vehicle for the American worker. Blog after blog has discussed ways to secure the benefit promises for those pension plans still operating in the hope that the tide to offloading these critical funds would be slowed, if not stemmed.

When IBM announced that they were going to reopen their plan, I produced the post “Oh, What A Beautiful Morning”, and promised not to sing. I’m also not going to sing today, but I might just shout from the rooftops, if the rain stops in NJ. Why? There is a new DB fund that has just been approved! YES!!

Dee-Ann Burbin, The Associated Press, is reporting that “U.S. meatpacking workers are getting their first new defined benefit pension plan in nearly 40 years under a contract agreement between Brazil-based JBS, one of the world’s largest meat companies, and an American labour union”.

The United Food and Commercial Workers union said 26,000 meatpacking workers at 14 JBS facilities would be eligible for the multi-employer pension plan. “This contract, everything that was achieved, really starts to paint the picture of what everybody would like to have: long-term stable jobs that are a benefit for the employees, a benefit for the employers and a benefit for the community they operate in,” Mark Lauritsen, the head of the UFCW’s meatpacking and food processing division, told the Associated Press in an interview.

In a statement, JBS said the pension plan reflected its commitment to its workforce and the rural communities in which it operates. “We are confident that the significant wage increases over the life of the contracts and the opportunity of a secure retirement through our pension plan will create a better future for the men and women who work with us at JBS.” Lauritsen said DB pension plans used to be standard in the meatpacking industry but were cut in the 1980s as companies consolidated. Big meat companies like Tyson Foods Inc. and Cargill Inc. now offer 401(k) plans but not traditional pensions.

According to Burdin’s article, the union started discussing a return to pensions a few years ago as a way to help companies hang on to their workers. “The good thing about a 401 (k) is that it’s portable, but the bad thing about a 401 (k) is that it’s portable,” he said. “This was a way to capture and retain people who were moving from plant to plant, chasing an extra dime or a quarter”, according to Lauritsen

Workers hailed the plan. “Everything now is very expensive and it’s hard to save money for retirement, so this gives us security,” said Thelma Cruz, a union steward with JBS at a pork plant in Marshalltown, Iowa. A return to DB pension plans is unusual but not unheard of in the private sector. International Business Machines Corp. reopened its frozen pension plan in 2023. Let’s hope that this becomes a trend. As I’ve said many times, asking untrained individuals to fund, manage, and then disburse a “benefit” without disposable income, investment acumen, or a crystal ball is just silly! DB plans help the American worker avoid that trifecta of stumbling blocks!

05.28.25
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Where’s The Beef?

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

In case this little ditty got by you, today is National Hamburger Day. According to the history books, the beef patty that most of us love originated in Hamburg, Germany. It has nothing to do with the meat, which as far as I know was never pork/ham. I bring you this info not only because I am looking forward to my burger later this evening, but because of a lack of “beef” in today’s retirement industry.

Despite adoption of financial wellness programs, millions of workers in their 50s and early 60s remain critically unprepared to fund their retirement, “according to a new report from the Institutional Retirement Income Council”. How bad are the stats? Nearly 50% of Americans aged 55 to 64 have NO retirement savings – zilch, nada, zippo! That info comes courtesy of the Federal Reserve Board’s 2023 Survey of Consumer Finances, which was cited in the IRIC report. Furthermore, for those that have accumulated retirement savings, the median account balance is only $202,000, and totally insufficient for a retirement that could last more than 20 years. Applying the 4% rule to annual withdrawals provides this median participant an annual spending budget of $8,080. That certainly won’t get you much.

It gets worse. According to a bank of America study, “only 38% understand how to properly claim Social Security”. Compounding these issues is the fact that most underestimate how much they might need for health care, estimated at up to $315,000 in medical expenses, per Fidelity Investments.  

IRIC Executive Director Kevin Crain, the report’s author, wrote that the lack of preparedness is already leading to a troubling trend of “delayed retirements, workplace disruption, and heightened financial stress among older employees and their employers.”  

This dire situation needs to be rectified immediately, and the only way to ensure a sound retirement for our American workforce is to once again institute defined benefit (DB) pension plans. Asking untrained individuals to fund, manage, and then disburse a “benefit” through a DC plan without disposable income, investment acumen, or a crystal ball to help with longevity is just silly. There’s just no beef in today’s retirement offerings!

Where’s Clara Peller when we need her the most?

05.13.25
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My Wish List as a Pension Trustee

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

I’ve been a trustee for a non-profit’s foundation fund. I haven’t been a Trustee for a defined benefit pension plan, but I’ve spent nearly 44-years in the pension industry as both a consultant and investment advisor working with many plan sponsors of varying sizes and challenges. As anyone who follows this blog knows, Ryan ALM, Inc. and I are huge advocates for DB pension plans. We believe that it is critical for the success of our retirement industry that DB pension plans remain at the core of everyone’s retirement preparedness. Regrettably, that is becoming less likely for most. However, if today I were a trustee/plan sponsor of a DB pension plan, private, public, or multiemployer, this would be my wish list:

  • I would like to have more CERTAINTY in managing my DB pension fund, since all my fund’s investments are subject to the whims of the markets.
  • I would like to have the necessary LIQUIDITY to meet my plan’s benefits every month without having to force a sale of a security or sweep income from higher growth strategies (dividends and capital distributions) that serve my fund better if they are reinvested.
  • I would like to have a longer investing HORIZON for my growth (alpha) assets, so that the probability of achieving the strategy’s desired outcome is greatly enhanced.
  • I don’t want to have to guess where interest rates are going, which impact both assets (bond strategies) and liabilities (promised benefits). Bonds should be used for their CASH FLOWS of interest and principal at maturity.
  • I don’t want to pay high fees without the promise of delivery.
  • I’d like to have a more stable funded status/funded ratio.
  • I want annual contribution expenses to be more consistent, so that those who fund my plan continue to support the mission.
  • I want my pension fund to perform in line with expectations so that I don’t have to establish multiple tiers that disadvantage a subset of my fund’s participants.
  • I want my fund to be sustainable, even though I might believe it is perpetual.

Are My Desired Outcomes Unreasonable?

Absolutely, not! However, there is only one way to my wish list. I must retain a Cash Flow Matching (CFM) strategy, that when implemented will provide the necessary liquidity, extend the investing horizon, eliminate interest rate risk, bring an element of certainty to a very uncertain process, AND stabilize both contribution expenses and the funded status for that portion of the portfolio using CFM.

Is there another strategy outside of an expensive annuity that can create similar outcomes? NO! I believe that the primary objective in managing a DB plan is to SECURE the promised benefits at a reasonable (low) cost and with prudent risk. CFM does that. Striving to achieve a return on asset (ROA) through various fixed income, equity, and alternative strategies comes with great uncertainty and volatility.  The proverbial rollercoaster of outcomes. The CFM allocation should be driven by my plan’s funded status. The higher the funded status, the greater the allocation to CFM, and the more certainty my fund will enjoy.

I believe that since every plan needs liquidity, EVERY DB pension fund should use CFM as the core holding. I want to sleep well at night, and I believe that CFM provides me with that opportunity. What do you think?

05.07.25
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Source Ryan – Question of the Day.

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

We often get comments and questions following the posting of a blog. We welcome the opportunity to exchange ideas with interested readers. Here is a recent comment/question from a LinkedIn.com exchange.

Question: In reviewing the countless reports, reading past agendas, and meeting minutes for these 20 plans, I did not notice any CFM or dedicated fixed income strategies employed by any of them. Perhaps there are a couple that I missed that do, or perhaps some have since embarked on such a strategy. Why wouldn’t public fund plan sponsors use Cash Flow Matching (CFM)?

There really isn’t a reason why they shouldn’t as pointed out by Dan Hougard, Verus, in his recent excellent piece, but unfortunately, they likely haven’t begun to use a strategy that has been used effectively for decades within the insurance industry, by lottery systems, and early on in pension management. Regrettably, plan sponsors must enjoy being on the rollercoaster of returns that only guarantees volatility and not necessarily success. Furthermore, they must get excited about trying to find liquidity each month to meet the promised benefits by scrambling to capture dividend income, bond interest, or capital distributions. If this doesn’t prove to be enough to meet the promises, they then get to liquidate a holding whether it is the right time or not.

In addition, there must be a particular thrill about losing sleep at night during periods of major market disruptions. Otherwise, they’d use CFM in lieu of a core fixed income strategy that rides its own rollercoaster of returns mostly driven by changes in interest rates. Do you know where rates are going? I certainly don’t, but I do know that next month, the month after that, followed by the one after that, and all the way to the end of the coverage period, that my clients will have the liquidity to meet the benefit promises without having to force a sale in an environment that isn’t necessarily providing appropriate liquidity.

The fact that a CFM strategy also eliminates interest rate risk because benefit payments are future values, while also extending the investing horizon for the fund’s growth assets are two additional benefits. See, there really is NO reason not to retain a cash flow matching expert like Ryan ALM, Inc. to bring certainty to the management of pensions that have lived with great uncertainty. In doing so, many plans have had to dramatically increase contributions, alter asset allocation frameworks to take on significantly more risk, while unfortunately asking participants to increase employee contributions, work more years, and receive less at retirement under the guise of pension reform. Let’s stop doing the same old same old and explore the tremendous benefits of Cash Flow Matching. Your plan participants will be incredibly grateful.

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!

04.23.25
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Housing: A Major Impediment to Saving for Retirement

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

The demise of defined benefit (DB) pensions is putting great financial pressure on individuals to save for retirement through a defined contribution (DC) program. I’ve often railed about asking untrained individuals to take on the responsibility to fund, manage, and then disburse a “benefit” through a DC plan, arguing that most Americans don’t have the necessary disposable income, investment acumen, or a crystal ball to help with longevity issues.

Many (most)Americans are financially strapped and there are many contributors to this crisis, including student loan debt, monthly childcare expenses, food, medical insurance, car/home insurance, and housing costs to name but a few. I could address each of these and the impact that they have on the average American worker, but let’s focus on housing today. The cost of buying and maintaining a residence is suffocating. Property taxes often add the equivalence of a monthly “mortgage” on top of one’s monthly mortgage, especially if you live in high tax states such as New Jersey.

Here are some startling facts when comparing the impact of housing costs on families from the 1950s to today’s circumstances. It wasn’t unusual to have only one member of a couple (mostly the male) working outside the home in the 1950s. That ability has nearly vanished today. Why? Well for one, the average home was <$7,400 in the early ’50s and the average family income was roughly $3,300. So, for slightly more than 2Xs one’s family income you could own your roughly 1,000 square foot home.

Today, the median home is priced at $431k according to Redfin, while the median household income is <$80k. Maryland leads that way at just over $94,000, while Mississippi trails all states at $44k. It now costs more than 5Xs one’s family income to purchase a home in the U.S. By the way, the “average” home in the ’50s would be worth about $98k in today’s $s so about 23% of what it actually costs to buy today. Oh, my! The housing market has dramatically outpaced inflation during the last 7 decades, and there doesn’t seem to be an end to the escalation despite the greater home prices and today’s interest rate environment.

Just the housing costs alone are a great burden of the American worker. Add to this expenditure all that was mentioned above and then some, and you shouldn’t be surprised that median 401(k) balances are as anemic as they are. Let’s work together to bring back traditional DB plans so that most Americans will have a decent opportunity to retire before their 80th birthday!