Tag Archives: sfa

12.09.24
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ARPA Update as of December 6, 2024

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

You have to be excited as a Mets fan given yesterday’s news that Juan Soto will be joining the organization on a massive contract. The $765 million is a staggering figure. Let’s see what happens to ticket prices and TV streaming services from a cost standpoint.

Since ARPA was passed in 2021 and signed into law in March of that year, there have been folks upset that the government is using “tax revenue” to rescue pensions for multiemployer plans. Well, in the latest update provided by the PBGC, we note that the Pressroom Unions’ Pension Plan, a non-priority group member, will receive $63.7 million to protect and preserve the promised pensions for 1,344 plan participants. That seems very reasonable since this grant will likely cover these benefit payments for roughly the same time frame that Soto will be a Met (15 years), at only $12.7 million more than just one year of Soto’s contract.

In other ARPA news, the e-filing portal is listed as “limited”, which according to the PBGC means that “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.” PA Local 47 Bricklayers and Allied Craftsmen Pension Plan was the only plan to file an application (revised) last week. They are seeking $8.3 million in SFA for 296 members in the fund.

In other news, three funds, including Toledo Roofers Local No. 134 Pension Plan, Freight Drivers and Helpers Local Union No. 557 Pension Plan, and PACE Industry Union-Management Pension Plan, were asked to repay a total of $7 million in excess SFA due to census issues. The rebate represented 0.45% of the $1.6 billion received in SFA grants. Happy to report that there were no applications denied or withdrawn during the prior 7-day period.

As the chart above highlights, there are still 57 plans that have yet to file an application seeking SFA support. Estimates range from another $10 – $20 billion being allocated to the remaining entities.

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.

11.18.24
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ARPA Update as of November 15, 2024

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

I can’t believe that Thanksgiving is next week. It appears that the PBGC was motivated to get some things done in anticipation of that holiday, as we witnessed more activity last week than we’ve been seeing in the most recent past.

There were four applications filed last week, including the following pension plans: Roofers and Slaters Local No. 248 Pension Plan, Pension Plan of the Asbestos Workers Philadelphia Pension Fund, Local 1783 I.B.E.W. Pension Plan, and Cement Masons Local Union No. 567 Pension Plan. These plans are not seeking significant sums as far as the SFA goes, as in total they are seeking $92.6 million for 2,637 participants. The IBEW plan out of Armonk, NY submitted a revised application. The other three were the initial filings for these plans.

Pleased to report that Local 360 Labor-Management Pension Plan received approval for its revised application. This fund will receive $30.4 million for the 6,117 members of the plan. This fund initially filed an SFA application in early 2023 only to withdraw it in July 2023. Good for them that they were finally successful in receiving the grant.

Local 810 Affiliated Pension Plan wasn’t as fortunate as Local 360, as they withdrew the initial application that had been seeking $104.1 million for 1,437 members of the plan. In addition to the four new filings, the one withdrawal, and the one approved application, the PBGC also was involved in negotiating two repayment of excess SFA due to census errors. Iron Workers Local 17 Pension Fund
Bricklayers and Allied Craftsmen Local 7 Pension Plan returned $260,471.70 representing only 19 bps of the SFA grants awarded. To date, 25 funds have returned a total of $149.9 million representing 0.38% of the awarded grants.

Recessionary expectations have waned in the last couple of months and flows into bonds, which had been strong for most of the year have recently turned negative. As a result, US interest rates have backed up. It is a great time to secure the promised benefits (and expenses) through cash flow matching strategies. A rising rate environment will be quite bearish for traditional fixed income shops. We’ll be happy to provide you and your fund with a free analysis of what can be achieved through a defeasement strategy.

11.13.24
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ARPA Update as of November 8, 2024

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

The PBGC continues to implement the ARPA legislation, although last week revealed less apparent activity according to its weekly update. The legislation which was approved in March 2021 and implemented beginning in July of that year, has now been active for about 3 1/3 years. I remain impressed with the PBGC’s effort to-date, as 98 pension plans have received Special Financial Assistance grants and interest totaling more than $69.4 billion. Wow!

Regarding last week’s activity, there was one fund invited to submit an initial application. The Aluminum, Brick & Glass Workers International Union, AFL-CIO, CLC, Eastern District Council No. 12 Pension Plan, is seeking $10.6 million in SFA for 580 plan participants. The PBGC has until March 6, 2025 (I can’t believe that is only 120 days away!) to act on the application.

In other news, Local 734 Pension Plan, an IBT fund out of Chicago, withdrew its initial application seeking $109 million for its 3,453 members. That application had been submitted on July 15, 2024 and it was nearing the PBGC’s 120-day deadline.

There were no applications denied, no excess funds repaid, no applications approved, and no plans added to the waitlist, which continues to list 62 funds yet to file an initial application. Finally, US Treasury interest rates continue to rise across the yield curve providing plan sponsors with the wonderful opportunity to reduce the cost of securing the promised benefits through the SFA grants, while the legacy assets and future contributions benefit from an extended investing horizon.

11.04.24
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ARPA Update as of November 1, 2024

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

Welcome to November. I’m shocked by how quickly the year is flying by. I’m also thankful that the incessant political commercials will soon be behind us.

The PBGC had a very good and busy last week, as we witnessed quite a bit of activity in the implementation of the ARPA legislation. Always pleased to announce that three plans received approval for Special Financial Assistance, including the last member of the #6 priority group. Pension Plan of the Marine Carpenters Pension Fund (their initial application), United Food and Commercial Workers Union and Participating Food Industry Employers Tri-State Pension Plan (the Priority Group 6 member), and Local 111 Pension Plan were granted a total of $736.1 million for just over 32k participants.

In addition to the approvals, the eFiling portal was open to Lumber Industry Pension Plan and the Laborers’ Local No. 130 Pension Fund. In the case of the lumber Industry plan, it appears that they get to chop off some of the wait time for approval as their application indicates an expedited review. This plan is seeking $103.2 million for 5,834 members. Local No. 130 filed its initial application in which they are hoping to receive $32.1 million for 641 plan participants.

There were also four plans that withdrew initial applications for SFA. Alaska Plumbing and Pipefitting Industry Pension Plan, Lumber Industry Pension Plan, Upstate New York Engineers Pension Fund, and Pension Plan of the Automotive Machinists Pension Trust were collectively seeking $438.3 million for just under 22k participants. Each of these plans are non-priority funds. Only 15 of the original 87 Priority Group members have not received approval at this time.

Finally, there were no applications denied during the prior week and no funds rebated excess SFA on account of census errors. There were also no pension plans added to the waitlist which stands at 63 that haven’t seen any activity at this time. There hasn’t been a plan added to the waitlist since July 2024 with the addition of the Production Workers Pension Plan.

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.