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ARPA Update as of July 10, 2026
By: Russ Kamp, CEO, Ryan ALM, Inc.
Another Monday, another ARPA update. If this legislation wasn't so important to so many American workers promised a benefit that had a very uncertain future, you'd probably say "enough already". But we know that DB pension benefits provide retirees with some certainty and contribute to a more dignified retirement.
The ARPA legislation, and the PBGC's implementation of this critical program, is less than 6-months from its completion. As a result, weekly activity is waning. The previous highlights this trend, as only 1 pension fund received approval of its SFA application. Iron Workers-Laborers Pension Plan of Cumberland, Maryland, will receive $22.7 million for the plan's 754 participants, as this non-priority group member received approval for its revised SFA application on July 8th.
There was no other apparent activity during the previous week, as no applications were received, denied, or withdrawn. The waitlist still has one non-Mass Withdrawal fund that has yet to submit an application to the PBGC.
There are currently eight applications before the PBGC. Roofers and Slaters Local No. 248 Pension Plan's application must be acted on by July 18th by the PBGC, or they will automatically receive an SFA grant, currently estimated at $5.1 million.
For pension plans still waiting to receive SFA or for those that have recently received their grant, U.S. rates continue to be near cycle highs, providing pension sponsors with the opportunity to secure those future benefits with greater cost reduction.
Lastly, the PBGC continues to codify its rules regarding permissible investments for the SFA proceeds, which seems surprising given that we are 5-years into the program and their oversight. Ron Ryan and I will provide our thoughts on the latest proposed changes in a separate post.
Ryan ALM, Inc. - Q2'26 Newsletter
By: Russ Kamp, CEO, Ryan ALM, Inc.
We are pleased to share with you our insights and perspectives on the relationship of pension assets to pension liabilities (benefits and expenses) through the Q2’26 Newsletter. As you will read, the second quarter produced a nice turnaround for pension funding following a challenging Q1, as asset growth far outpaced liability growth. As a result, funded ratios are at a high point since we began our analysis back in 2020.
As always, we encourage you to reach out to us with any questions or observations. Thank you for taking the time to read our insights.
Complexity Doesn't Make it Good or Appropriate
By: Russ Kamp, CEO, Ryan ALM, Inc.
We have a serious retirement problem in the U.S. Defined benefit plans have mostly been replaced in the private sector, and rising contribution levels are making public pension offerings problematic for the sponsoring entities. These issues are compounded by the fact that many defined benefit plans have migrated significant assets to opaque, complex, and costly alternative investments. In the process, creating liquidity to meet ongoing benefits and expenses has become more challenging.
Managing a DB pension plan isn't complicated, yet we continue to make it so. I read an Institutional Investor article with interest, and some alarm, that a public pension system operating with negative cash flow (contributions < benefits and expenses) has decided that the best way to address the liquidity shortfall is to move assets into ""a lot more esoteric lending strategies" like asset-based finance and royalty-based lending in sectors such as entertainment, healthcare, and aircraft engine leasing." The CIO for this fund continued, "we're going into a lot of illiquid structures, so we structure the portfolio to make sure we have enough liquidity to meet our benefit payments at all times," Really????
Going into illiquid structures to ensure adequate liquidity seems oxymoronic. We've seen what has transpired in both private equity and private debt regarding distributions and the lack thereof. Again, our industry often brings complexity to a problem when there are far simpler ways to tackle an issue. For decades, Cash Flow Matching (CFM) has carefully matched asset cash flows of bond interest and principal with the liability cash flows of benefits and expenses (B&E) chronologically. There is no hoping that the liquidity will be available when needed.
U.S. rates are currently at levels providing plan sponsors with the ability to SECURE future B&E at low cost and with certainty barring any defaults in IG bonds (<0.2%/year for the last 40-years). Why engage in expensive, opaque "solutions" when a CFM strategy can be adopted for pennies on the $. CFM is a-sleep-well-at-night strategy, which will be comforting to not only the plan sponsor but the plan's participants. Please stop thinking that a solution needs to be complex to be good. Some of the very best approaches are transparent, straight-forward, and inexpensive: like CFM!
It's The Wrong Benchmark!
By: Russ Kamp, CEO, Ryan ALM, Inc.
Mark Stricherz has penned an article for The Center Square discussing the Pennsylvania Public-School Employees' pension fund and its $41 billion shortfall. The gist of article centered on the fact that PSERS failed to exceed it's investment benchmark last years which fund officials blamed on private equity.
A bit of background: As of Dec. 31, PSERS held $85.3 billion in assets, including $10.1 billion in private equity. Long-term return expectations for this asset class were an annual 10.06% return. The precision of the return expectation seems a bit silly and quite modest given the asset class's poor transparency, lack of liquidity, and excessive fees. As a point of comparison, the S&P 500 returned 11.4% for the 20-years through June 30, 2026. Regrettably, PSERS' PE funds produced only a 2.59% last year. As ugly as that return is, that is NOT the reason that PSERS is $41 billion in the whole and Pennsylvania taxpayers on the hook.
An investigation by The Center Square found that private equity was the only one of PSERS' eight asset classes to miss its benchmarks over one-, three-, five-, 10- and 15-year periods. Interesting! I find it hard to believe that the fund had this kind of relative outperformance and yet still must deal with a $41 billion shortfall. Again, I don't believe that PE is the sole cause.
As I've been reporting for years, the primary objective in managing a defined benefit plan is NOT one focused on return (the ROA). It is the SECURING of the promised benefits at a reasonable cost and with prudent risk. It is a LIABILITY objective. It doesn't matter that a plan's assets outperform their respective asset class objectives if the plan's total fund fails to exceed liability growth. Presently, there are roughly 500,000 members and beneficiaries counting on those promised benefits.
A successful DB pension plan understands its commitments. You’ve made a promise: measure it – monitor it – manage it – and SECURE it! Focusing on return only guarantees volatility. Volatility of returns, contributions, and funded status. Get off the performance rollercoaster.
ARPA Update as of July 2, 2026
By: Russ Kamp, CEO, Ryan ALM, Inc.
Whether you celebrated America's independence on July 2nd or 4th, we hope that you had a wonderful weekend celebrating 250-years with family and friends.
Regarding the PBGC's implementation of ARPA's pension legislation, we can report that Albany-based Iron Workers Local No. 12 Pension Fund, a non-priority SFA candidate, will receive $4.7 million in SFA for its 659 members following approval by the PBGC of the revised application.
In other news, the 90 members of the PMPS-ILA Pension Plan and Trust are hoping that the revised application will soon be approved providing the fund with $769k in SFA.
Pleased to report that there were no funds denied the ability to submit an application and no applications before the PBGC were withdrawn. However, Plasterers Local 79 Pension Plan still remains the only non-Mass Withdrawal waitlist candidate to not submit an application at this time.
U.S. interest rates remain at attractive levels providing plan sponsors with the opportunity to significantly reduce the cost of future pension promises, while securing monthly liquidity needs. We would welcome the opportunity to produce a free cash flow analysis on what your fund's projected SFA could potentially do for your fund.
July 2, 1776 - The Real Independence Day!
By: Russ Kamp, CEO, Ryan ALM, Inc.
We'll depart from the usual focus on defined benefit pensions for a day to bring you this history lesson.
Hear ye, hear ye: We've been celebrating the wrong "Independence Day" for 250-years. How's that? Well, if it were up to John Adams (and others), we'd be celebrating the 250th anniversary of the United States today.
On July 2, 1776, the Continental Congress voted to approve Richard Henry Lee’s (Virginia) resolution "that these United Colonies are, and of right ought to be, free and independent States, that they are absolved from all allegiance to the British Crown, and that all political connection between them and the State of Great Britain is, and ought to be, totally dissolved". which is the formal decision to break from Britain.
In fact, this was the second day of voting on this resolution, as the first vote on July 1, 1776, saw Pennsylvania and South Carolina vote no, Delaware's delegates were split, and New York abstained. Why? Lee's resolution included three parts:
- Seek independence
- Establish foreign-alliances
- Prepare a plan of confederation
On July 2nd, 1776, the second and third parts of the resolution were deferred paving the way for the vote to be unanimous, except that New York once again abstained. They eventually accepted the resolution. That July 2nd vote was the real political act of independence; July 4th was when Congress adopted the text of the Declaration explaining and announcing that decision.
To add further intrigue, if not confusion, according to the National Archives and several historians, August 2nd is often cited as Independence Day because that is when the parchment copy of the Declaration was first signed by most delegates, including John Hancock, who was the first delegate to sign in his capacity as the President of the Continental Congress.
ARPA Update as of June 18, 2026
By: Russ Kamp, CEO, Ryan ALM, Inc.
I hope that all the Dads who may stumble onto this post had a wonderful Father's Day.
Welcome to the latest update on the ARPA pension legislation. Following a couple of weeks without obvious activity, the PBGC received one revised application from Local 1814 Riggers Pension Plan. This Staten Island, NY-based ILA fund is requesting $2.5 million in Special Financial Assistance (SFA) for its 65 members. The PBGC now has until October 10, 2026 to act on the application or they will automatically receive the SFA proceeds plus interest.
There is no other activity to report outside of this one fund resubmitting its application, as no current applications in front of the PBGC have been approved nor denied. No applications withdrawn and no new funds added to the waitlist. There are currently nine revised applications before the PBGC. There remain >25 applications that have been withdrawn that will likely be resubmitted prior to year-end.
I'm still waiting to learn the fate of the 80 pension funds residing on the waitlist that are Mass Withdrawal casualties prior to 2020. Will they be given the opportunity to file an application or will further legal activity deem them unworthy candidates? In any case, this legislation has been a huge success for American workers promised a benefit that may not have been received. To date, 2,017,527 participants have received $77.9 billion in SFA to support those promises. Yes!
Just Another Value Stock???
By: Russ Kamp, CEO, Ryan ALM, Inc.
Sometimes you just have to laugh at the insanity in our industry. After publishing the post below today, I saw an article that said that Schwab has added a small allocation (0.012%) of SpaceX (SPCX) to their U.S. Large-Cap Value ETF. Now, I realize that SPCX is trying to capture our collective imaginations about space, but there is no way that a Value fund can justify these other worldly valuations. So much for style purity.
Pension Problem: Gross versus Net Liabilities
By: Ronald J. Ryan, CFA, Chairman, Ryan ALM, Inc.
Most pension plans are focused on gross liabilities as expressed by the funded ratio (total assets / total liabilities) and funded status (total assets – total liabilities). But the truth is plan assets are to fund NET liabilities after contributions. Contributions can be quite large especially for public pension funds. Pension assets need to know what they are funding… answer = NET liabilities. Unfortunately, actuaries do not calculate NET liabilities, nor do they include contributions as an asset to calculate the funded ratio / status. These oversights have an impact on asset allocation, especially if it is focused on the true economic funded status of solvency. The Ryan team created the first Custom Liability Index (CLI) in 1991 that has become a core product of Ryan ALM. Our CLI will calculate NET liabilities as a term structure, so assets and the plan sponsor know the liquidity needed and when to fund NET liabilities.
GASB accounting requires a test of solvency (asset exhaustion test or AET) for public funds (which should be a requirement for all types of pensions) that includes contributions as a future asset to help fund the future liability cash flow schedule. Assets are grown at the return on asset assumption (ROA) to see if they can fully fund projected benefits – projected contributions (net liabilities). At the point that assets are exhausted, GASB requires a bifurcated discount rate using AA 20-year municipal rates. Ryan ALM modifies the GASB AET to calculate the ROA needed to fully fund net liabilities. We find that our calculated ROA is usually much lower than the ROA assumption currently being used. Our calculated ROA should be the hurdle rate for asset allocation instead of the common practice of choosing an ROA based on an asset only forecast of returns by asset classes. Our modified AET should be the first step in asset allocation after the CLI is built.
Bonds are the only asset class with the certainty of cash flows. That is why bonds have always been used to defease and immunize liabilities. Our Liability Beta Portfolio™ (LBP) is a cost optimization model that will fully fund NET liabilities at the lowest cost to the plan sponsor. We strongly believe that the bond allocation should be used to fully fund NET liabilities chronologically. In the process, an extended investment horizon is created buying time for the Alpha assets to grow unencumbered. We have found that converting the plan’s core fixed income allocation to a cash flow matching portfolio will normally cover the plan’s next 10+-years of benefit payments. Instead, some pension plans use a “Cash Sweep” to fund current liabilities which significantly damages the total return produced by those growth assets. Let bonds fund NET liabilities with certainty through our LBP… and sleep well at night.
“Where is the knowledge we have lost in information?” T.S. Eliot
Just Another Meme Stock?
By: Russ Kamp, CEO, Ryan ALM, Inc.
Equity markets are partying like it's 1999! Valuations be damned! Are the improved funded ratios for defined benefit plans going to be secured through de-risking strategies or are they going to once again be subjected to the whims of the capital markets? For plan sponsors benchmarking your equity exposure to the S&P 500, are you prepared for the volatility potentially associated with the great technology concentration (now roughly 50% of the index)? For those invested in the Nasdaq indexes, are you prepared for SpaceX's impact, which should happen soon?
Come on, folks. Let's not repeat the mistakes of the past. Higher interest rates, higher inflation, crazy equity valuations, and geopolitical uncertainty have not seemed to tamp enthusiasm for U.S. stocks. What will? Will it take a stock like SpaceX - now valued at $2.75 trillion - to be the reason that stocks fall back to earth? SpaceX has been trading for three days. The action on the stock suggests that it is just another meme stock.
Can you believe that SpaceX has overtaken Amazon as America's fifth-largest company? A closer examination of the fundamentals shows just how irrational our markets/investors have become. Let's look at the current fundamentals of Amazon versus SpaceX.
Valuation
SpaceX’s valuation is being priced as an extraordinarily high-growth story, despite being a money-losing company, which is why its P/S is dramatically higher than Amazon’s. Amazon, by contrast, already has large-scale revenue and meaningful profitability, so its valuation looks much more grounded in current fundamentals, despite it carrying a rich valuation at 34x normalized earnings.
Profitability
Amazon is clearly ahead on earnings quality: it generated $80.0B of operating income and $77.7B of net income in 2025. SpaceX, on the other hand, reported a $9.36B trailing-twelve-month loss and a negative net margin.
Growth profile
Clearly, SpaceX’s case is mostly about future optionality: investors are paying for expected expansion in launch, satellite, and adjacent businesses rather than present-day profits. Amazon’s case is more balanced because it combines growth with profitability, especially from AWS and advertising, which support its margins.
SpaceX will need to increase sales by roughly 37x to match Amazons P/S of 3.5x. Nothing grows to the heavens - even a rocket company. Risks to pension funding seem to be skewed to the downside. It is time to take some profits and secure the promises that have been given to your plan participants. Please don't waste another golden opportunity to fortify your plan's funding.