All about risk
Link: https://burypensions.wordpress.com/2022/01/14/sfa-update-revisions/
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The PBGC Special Financial Assistance program for troubled multiemployer plans is updating again this weekend. No new applicants but the PBGC summary worksheets did have two plans withdrawing and reapplying which made me wonder if these revisions were looking for more or less money.
Author(s): John Bury
Publication Date: 14 Jan 2022
Publication Site: Burypensions
Link:https://burypensions.wordpress.com/2021/11/17/municipal-budgets-2021-4-pension-contributions/
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Over at countywatchers I have a series comparing 2021 budget items for the municipalities in Union County and part 4 relates to this blog so here it is.
Comparing pension records to 2021 budget allocations that municipalities in Union County made for their contributions to the New Jersey Public Employees Retirement System (PERS) and Police and Firemen’s Retirement System (PFRS) shows that, on average, PERS and PFRS contributions made up 8.17% of total budgets, representing $170 per resident. The average contribution as a percentage of a participant’s salary came to 25.03% with $19,942 as the average contribution per participant.
Author(s): John Bury
Publication Date: 17 Nov 2021
Publication Site: burypensions
Link: https://burypensions.wordpress.com/2021/11/12/sfa-bailout-timeline/
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For those wondering when payments under the PBGC Special Financial Assistance program will be coming, the International Foundation of Employee Benefit Plans blog has some guidance.
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The Pension Benefit Guaranty Corporation (PBGC) and Treasury officials have delivered a new briefing on the special financial assistance (SFA) program for financially troubled multiemployer plans under the American Rescue Plan Act of 2021 (ARPA). During the briefing on July 22, 2021, PBGC officials walked through the e-filing process, application instructions, assumption changes and what to expect after submitting the application. A recording and slides of the briefing are available here.
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During the 120-day window, plans must notify PBGC about any facts or data submitted in the application that are no longer accurate. By day 120, PBGC will make a determination to approve or deny the SFA application.
Author(s): John Bury
Publication Date: 12 Nov 2021
Publication Site: burypensions
Link:https://burypensions.wordpress.com/2021/10/25/sfa-application-through-the-forest-and-into-the-weeds/
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The Road Carriers Local 707 Pension Fund , which was the first plan to seek bailout money under the PBGC Special Financial Assistance (SFA) program for troubled multiemployer plans, has their 425-page application uploaded on the SFA website.
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412-425) SFA calculations which is a fairly simple spreadsheet calculating the present value of the liabilities of all current participants (pages 419-420) and coming up with one amount ($706,400,534) to cover all their liabilities through 2051. New entrants presumably will be covered by new negotiated contributions and, after 30 years though if any of the current participants survive until 2051 they will presumably need another bailout.
The problem PBGC has with this filing appears to be that an interest rate of 5.32% was used for valuing liabilities which happens to be 2% plus the first HATFA Segment Rate when it is the third PPA Segment Rate to which the 2% should have been added. Per the IRS website (scroll down a little to Funding Table 3), that rate would likely have been the April, 2021 rate of 3.52% which would have made 5.52% the rate to be used for valuing liabilities (thus lowering the liability value as the higher the interest rate the lower the value). The tricky part is that the PPA third Segment Rate has been going down and is now 3.34% as of October, 2021.
Author(s): John Bury
Publication Date: 25 Oct 2021
Publication Site: burypensions
Link:https://burypensions.wordpress.com/2021/10/23/sfa-new-filing-first-in-a-month/
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Plan Name: Local Union No. 466 Painters, Decorators and Paperhangers Pension Plan
EIN/PN: 14-6085295/001
Total participants @ 4/30/20: 45 including:
Retirees: 30
Separated but entitled to benefits: 8
Still working: 7Asset Value (Market) @ 5/1/19: $523,604
Value of liabilities using RPA rate (3.09%) @ 5/1/19: $5,108,203 including:
Retirees: $4,213,315
Separated but entitled to benefits: $820,490
Still working: $74,398Funded ratio: 10.25%
Author(s): John Bury
Publication Date: 23 Oct 2021
Publication Site: burypensions
Link:https://burypensions.wordpress.com/2021/10/17/asppa-2021-conference-day-1/
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General Session 1: Washington Update
per Brian Graff who has spent 25 years at ASPPA and got some recognition for it at the end of this session.
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Hispanic and Black coverage in 401(k) plans is low and if this situation it does not improve private sector plans could be eliminated in favor of a government option as in Australia. States (first Oregon, then CA, and 8 others) are setting up their own plans and forcing companies to be in it if they don’t have their own plans. This is good for us in that companies do not want to give their money to states (especially in CA and NJ) so they set up their own plans that need to administered by us.
Proposal that may be effective in 2023 is requiring all companies with at least six employees in the last two years to set up a 401(k) plan with auto-enrollment at 6% going up to 10%. Pie would increase by 62 million participants (from 95 million now) and 600,000 plans (on top of 800,000 now).
Author(s): John Bury
Publication Date: 17 Oct 2021
Publication Site: burypensions
Link:https://burypensions.wordpress.com/2021/10/15/5500-central-states-2020/
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We had some 5500 history in an earlier blog through 2016. This is where the plan was last year based on their 5500 filing for 2020:
Plan Name: Central States, Southeast & Southwest Areas Pension Plan
EIN/PN: 36-6044243/001
Total participants @ 12/31/20: 364,908 including:
Retirees: 191,550
Separated but entitled to benefits: 121,667
Still working: 51,691
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Funded ratio: 21.91%
Author(s): John Bury
Publication Date: 15 Oct 2021
Publication Site: Burypensions
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The Garden State Initiative released a report on the state of New Jersey finances. You have heard it all before but what keeps being left out of these ivory tower pronouncements is the systemic corruption at all levels and in all corners of officialdom here that makes even the slightest improvement in our general fiscal situation a pipe dream.
Here are some excerpts along with a few charts on the pension system, the last of which makes my point.
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Focus on that last chart. Liabilities actually decreased over the last two years. Significantly decreased against all logic and reason. Did everybody take a pay cut? Did 30% of plan participants disappear? No. The actuaries just got told to lower liability values and like dutiful apparatchiks they complied.
Author(s): John Bury
Publication Date: 22 Sept 2021
Publication Site: Burypensions
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Bellwether Education Partners is a “national nonprofit focused on dramatically changing education and life outcomes for underserved children. [They] do this by helping education organizations accelerate their impact and by working to improve policy and practice.” And making good money* doing whatever that means.
Apparently this think tank got some interns to go through official teacher pension data reported by the 50 states and the District of Columbia to come up with rankings. New Jersey was not last overall (probably on account of the ARP money that went into the pension this year) but Medium-term and Long-term New Jersey did come in last…..and by a lot.
Author(s): John Bury
Publication Date: 3 September 2021
Publication Site: burypensions
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Right now on the American Rescue Plan (ARP) website:
Status of Applications [.xls] – Coming Soon
Until those spreadsheets start popping up we have no clue as to why, by whom, and how these bailout applications are being made but, before seeing any numbers, one thing bothers me.
A footnote on that ARP website reads:
**MPRA plans can restore benefits under 26 CFR 1.432(e)(9)-1(e)(3) at any time, including before applying for SFA.
So why aren’t plan participants like Carol Podesta-Smallen in the MarketWatch story not having their monthly pension amounts restored to pre-MPRA levels and getting large checks to make up for past reductions? It would reduce asset values in those plans but isn’t that a good thing when applying for bailout money?
Author(s): John Bury
Publication Date: 31 August 2021
Publication Site: burypensions
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The Pension Benefit Guaranty Corporation (PBGC) on July 9, 2021 announced an interim final rule implementing a new Special Financial Assistance (SFA) Program for financially troubled multiemployer defined benefit pension plans.
What struck me:
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It is expected that over 100 plans that would have otherwise become insolvent during the next 15 years will instead forestall insolvency as a direct result of receiving SFA. Section 9704 of ARP amends section 4005 of ERISA to establish an eighth fund for SFA from which PBGC will provide SFA to multiemployer plans under the program created by the addition of section 4262 of ERISA. The eighth fund will be credited with amounts from time to time as the Secretary of the Treasury, in conjunction with the Director of PBGC, determines appropriate, from the general fund of the Treasury Department. Transfers from the general fund to the eighth fund cannot occur after September 30, 2030. (page 6)
Unlike the financial assistance provided under section 4261 of ERISA, which is in the form of a loan and provided in periodic payments, a plan receiving SFA under section 4262 has no obligation to repay SFA, and PBGC must pay SFA in the form of a single, lump sum payment. (page 7)
Author(s): John Bury
Publication Date: 10 July 2021
Publication Site: burypensions
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The Pension Benefit Guaranty Corporation (PBGC) today announced an interim final rule implementing a new Special Financial Assistance (SFA) Program for financially troubled multiemployer defined benefit pension plans.
Pertinent excerpts coming over the weekend but, for now, it looks like the bailout number moved from $86 billion to $94 billion per the PBGC press release:
Author(s): John Bury
Publication Date: 9 July 2021
Publication Site: burypensions