SFA Update – 9/2/22

Link: https://burypensions.wordpress.com/2022/09/02/sfa-update-9-2-22/



The PBGC Special Financial Assistance program for troubled multiemployer plans updated today with one new filer (Toledo Roofers Local No. 134 Pension Plan), one withdrawal (Bricklayers Union Local No. 1 Pension Fund) and one approval asking for more (Local Union No. 466 Painters, Decorators and Paperhangers Pension Plan). 

Author(s): John Bury

Publication Date: 2 Sept 2022

Publication Site: burypensions

PBGC Finalizes Rescue of Ailing Multiemployer Pension Plans

Link: https://www.ai-cio.com/news/pbgc-finalizes-rescue-of-ailing-multiemployer-pension-plans/


The Pension Benefit Guaranty Corporation, under the direction of the Biden administration, has published the final rule implementing the American Rescue Plan Act of 2021’s Special Financial Assistance program.

According to supporters of the program, the Special Financial Assistance program, which is already operating on an interim basis, will protect millions of workers in stressed multiemployer union pension plans who previously faced the possibility of significant cuts to their benefits.


Initially, the interim final rule applied a single rate of return included in the statute that is higher than could be expected for SFA funds given that they were required to be invested exclusively in safe, but low-return, investment-grade fixed-income products. The final rule uses two different rates of return for SFA and non-SFA assets, so that the interest rate for SFA assets is more realistic given the investment limitations on these funds.

Another change in the final rule allows up to 33% of SFA to be invested in return-seeking assets that are projected to allow plans to receive a higher rate of return on their investments than under the interim final rule, subject to certain protections. Namely, this portion of plans’ SFA funds generally must be invested in publicly traded assets on liquid markets to ensure responsible stewardship of federal funds. These return-seeking investments include equities, equity funds and bonds. The other 67% of SFA funds must be invested in investment-grade fixed-income products.

The third major change is meant to ensure plans can confidently restore both past and future benefits and enter 2051 with rising assets. PBGC designed the final rule to ensure that no “MPRA plan”—a group of fewer than 20 multiemployer plans that remained solvent by cutting benefits pursuant to the Multiemployer Pension Reform Act of 2014—was forced to choose between restoring its benefit payments to previous levels and remaining indefinitely solvent. Instead, the final rule ensures that all MPRA plans avoid this dilemma, supporting them with enough assistance so that these plans can both restore benefits and be projected to remain indefinitely solvent going into 2051.

According to PBGC leadership, these changes collectively ensure that all plans that receive SFA are projected to be solvent and pay full benefits through at least 2051.

Author(s): John Manganaro

Publication Date: 7 July 2022

Publication Site: ai-CIO

2021 Academy Legislative/Regulatory Review

Link: https://www.actuary.org/sites/default/files/members/alerts/pdf/2022/2022-CP-1.pdf


The American Academy of Actuaries presents this summary of select significant regulatory and
legislative developments in 2021 at the state, federal, and international levels of interest to the U.S.
actuarial profession as a service to its members.


The Academy focused on key policy debates in 2021 regarding pensions and retirement, health, life,
and property and casualty insurance, and risk management and financial reporting.

Responding to the COVID-19 pandemic, addressing ever-changing cyber risk concerns, and analyzing
the implications and actuarial impacts of data science modeling continued to be a focus in 2021.

Practice councils monitored and responded to numerous legislative developments at the state, federal,
and international level. The Academy also increased its focus on the varied impacts of climate risk and
public policy initiatives related to racial equity and unfair discrimination in 2021.

The Academy continues to track the progress of legislative and regulatory developments on actuarially
relevant issues that have carried over into the 2022 calendar year.

Publication Date: 15 Feb 2022

Publication Site: American Academy of Actuaries

If You’re a Frontline Worker, States Might Give You a Raise




Quit rates in fields such as education, health care and government are rising, as they are in other industries.

“You can see people moving out of teaching, and fewer teachers being hired,” said Brad Hershbein, senior economist and deputy director of research at the W.E. Upjohn Institute for Employment Research, a nonpartisan research organization based in Kalamazoo, Michigan. “And this also seems to be the case for health care workers—nurses in particular.” 

States employ about 5% fewer people in total than they did when the pandemic hit, according to the federal Bureau of Labor Statistics. Hospitals employ about 2% fewer people today than they did in March 2020.


Unexpectedly high revenues and federal COVID-19 relief funds give state leaders an opportunity to address the problem this year. States can use federal dollars from last year’s mammoth American Rescue Plan Act to offer bonuses to essential workers and grow the public sector workforce by up to 7.5%.

Author(s): Sophie Quinton

Publication Date: 27 Jan 2022

Publication Site: Pew Trusts

Education & Labor Committee Releases Multiemployer Pension Rescue Tracker




Today, the House Committee on Education and Labor unveiled a new Multiemployer Pension Rescue Tracker to highlight the hard-earned pensions saved and businesses protected under Congressional Democrats’ and President Biden’s American Rescue Plan Act.  The multiemployer pension crisis – which was accelerated by the COVID-19 pandemic – threatened to strip more than a million retirees of the pensions they earned over a lifetime of work, jeopardized tens of thousands of businesses and endangered tens of thousands of jobs.

In response, the American Rescue Plan Act created a Special Financial Assistance (SFA) Program to avert the immediate crisis threatening the retirement security of American workers, retirees, and their families.  This solution was supported by a diverse group of stakeholders, including the AFL-CIO, AARP, the United States Chamber of Commerce, UPS and scores of other employers who participate in multiemployer plans.


To view the pension tracker, click here.

Author: Education and Labor Committee

Publication Date: 2 Feb 2022

Publication Site: House of Representatives

SFA Update – One New Billion Dollar Filer

Link: https://burypensions.wordpress.com/2022/02/04/sfa-update-one-new-billion-dollar-filer/



The PBGC Special Financial Assistance program for troubled multiemployer plans weekend update showed one new plan applying – New York State Teamsters Conference Pension Plan out of Syracuse, NY which, when compared to the other applicants, is the second largest by participant count, asking for the third largest dollar amount amount ($1,035,864,068) and the second smallest as a percentage of unfunded liabilities (30.12%).

Author(s): John Bury

Publication Date: 4 Feb 2022

Publication Site: burypensions

Public sector pensions are prime beneficiary of federal COVID relief grants



Yet an analysis by the CT Mirror shows that more than six out of every 10 federal relief dollars built into the new state budget that began July 1 effectively will wind up in public-sector pension accounts.

And while Gov. Ned Lamont and others insist the new state budget — and the billions Congress sent to Connecticut via the American Rescue Plan Act — will be used to heal the state’s wounds, others question whether the administration’s priorities are askew. Pension debt deserves to be addressed after being ignored for decades, they say, but that shouldn’t come at the expense of the state’s response to a once-in-a-century health and economic crisis.


Analysts project the newly adopted $46.4 billion, two-year state budget will close in July 2023 with $2.3 billion left over — an amount that exceeds the $1.8 billion in federal coronavirus relief built into the budget. Because the state’s rainy day fund already is filled to the legal maximum, those dollars must go into either the pension fund for state employees or the retirement system for teachers.

And that’s in addition to the nearly $6 billion in required pension deposits Connecticut already plans to make as part of the two-year budget. That’s a supplemental payment of more than 35%.

Author(s): Keith Phaneuf

Publication Date: 7 July 2021

Publication Site: CT Mirror

Three subtle ways inflation helps state and local government coffers

Link: https://lizfarmer.substack.com/p/inflation-impact-local-governments


If inflation pushes up interest rates and accelerates wage growth, that could take some of the pressure off of public pension plan performance. Since the Great Recession, pension plans have been steadily lowering their assumed annual rate of return to better match the low-interest rate environment. Pension plan actuaries factor that rate when in calculating a government’s annual pension bill. Lowering that rate results in a higher bill because governments have to make up the difference. 

More stable returns. Rising inflation can result in higher returns from a pension plan’s fixed-income assets. Unlike the volatile equities market, the nice steady investment return from fixed-income securities is much nicer to rely on from a planning perspective. In fact, bonds used to be pensions’ bread and butter until interest rates began falling in the 1990s.

The National Association of State Retirement Administrators’ research director Keith Brainard told me this week that if inflation is sustained, governments could decide to stop lowering their investment return assumptions and some could even start raising them again. 

That could result in lower pension bills for governments with healthy plans. Or in the case of struggling plans like Chicago or Kentucky, it could at least slow the pace of their rising pension bills.

Higher worker contributions. What’s more, noted Brainard, accelerated wage growth also means those workers paying into pension plans will be contributing slightly more. “What wages will do when inflation is 2% is a lot different than when it’s 6%,” he said.

Author(s): Liz Farmer

Publication Date: 15 Dec 2021

Publication Site: Long Story Short at substack


Link: https://www.pgpf.org/blog/2022/01/how-have-states-used-their-direct-covid-relief-funds



The federal government provided $512 billion in direct financial assistance to help state and local governments cover their expenditures and revenue losses associated with the coronavirus (COVID-19) pandemic. So far, about $400 billion of that total has been disbursed. Here are some notable trends showing how lower levels of government have spent some of their relief funds using a database compiled by the National Conference of State Legislatures (NCSL).

Publication Date: 14 Jan 2022

Publication Site: Peter G. Peterson Foundation

What Illinois didn’t tell you about its celebrated early payment of federal loan – Wirepoints

Link: https://wirepoints.org/what-illinois-didnt-tell-you-about-its-celebrated-early-payment-of-federal-loan-wirepoints/


In fact, the state originally did intend to pay off the Federal Reserve loan with other federal bailout money from ARPA, the American Rescue Plan Act, according to The Bond Buyer. But the “Treasury threw a wrench in repayment prospects” when the initial federal guidance barred the use of ARPA aid for debt repayment. “The state lobbied for a change in a letter to Treasury Secretary Janet Yellen. But as state tax collections turned rosier, state leaders opted instead to cover repayment with tax collections,” says The Bond Buyer.

The bottom line is that all of us, as federal taxpayers, will bear the cost of the federal bailout, for Illinois and other states, whether through higher taxes to repay the Treasury or inflation created by Federal Reserve money creation. And Illinois will be worse off because only Illinois borrowed extra and incurred interest costs.

So, no, Governor Pritzker, paying back this loan ahead of schedule doesn’t mean Illinois achieved a “level of fiscal prudence not seen in our state for decades.”

Author(s): Mark Glennon

Publication Date: 7 Jan 2022

Publication Site: Wirepoints

Undermining Pension Reform



The Biden administration is trying to prohibit California from receiving billions of dollars in new federal aid because, the administration claims, the state’s 2013 Public Employee Pension Reform Act (PEPRA) denied workers the right to bargain for changes to their retirement benefits. The move could undermine state-worker pension reforms passed over the last decade.

In a letter to the state, the Department of Labor says that the 2013 pension-reform act “significantly interferes” with the collective bargaining rights of public employees, including transit workers. As a result, California risks losing some $12 billion in transportation money, most of it from the recently passed federal infrastructure bill. The administration is strong-arming the state and its municipalities to choose between tens of billions of dollars in savings for a deeply indebted pension system and grants from Washington. And its move raises serious questions about similar reforms enacted by other states that allow collective bargaining by public employees, including New York and New Jersey.


The Labor Department’s ruling, California governor Gavin Newsom said in a letter to Walsh, “deprives financially beleaguered California public transit agencies that serve essential workers and our most vulnerable residents of critical support, including American Rescue Plan Act funds that those agencies need to survive through the pandemic.” Newsom called the decision a “complete reversal” from a 2019 ruling by the Labor Department, which held that the state’s pension reforms did not represent a violation of federal law.

Author(s): Steven Malanga

Publication Date: 23 Nov 2021

Publication Site: City Journal