Nailing SFA Rate Blunder

In comparing how much bailout money insolvent multiemployer plans are asking from the government to what they reported as unfunded liabilities on their latest 5500 filings some substantial differences come to light.

For example, one plan asked for $14 million when their unfunded liabilities are $6.5 million. Now that I understand how these calculations are done that mystery is cleared up.

Here is a listing of those 20 plans with what they requested, what they reported as their unfunded liabilities using RPA rates (about 3%), the percentage of that unfunded liability that the requested bailout would cover, and the interest rate used to calculate the SFA liabilities that the request was based on.

The Carpenters Industrial Council of Eastern PA calculates needing 217.2% of unfunded liabilities for one simple reason. When they get their $14 million they are expecting to make $0 in trust earnings on it for 30 years.

If this application gets approved then PBGC is surely working with a rubber stamp and not a fine-tooth comb.

5 responses to this post.

  1. Not sure Rubber stamp is the correct word. The law doesn’t give PBGC must discretion when it comes to approving applications. I forget the exact language but an application has to be really incorrect for PBGC to not approve it. So don’t blame pbgc, blame the law.

    Reply

  2. Not sure Rubber stamp is the correct word. The law doesn’t give PBGC must discretion when it comes to approving applications. I forget the exact language but an application has to be really incorrect for PBGC to not approve it. So don’t blame pbgc, blame the law, which is the blame, if any,, properly belongs.

    Reply

  3. Posted by aon12345 on November 8, 2021 at 7:22 pm

    You really don’t have a clue do you. In your comment about the carpenters you say when they get their $14 million they expect to earn $0. You should really try reading the law (assuming of course you can read). The law is very straightforward in that the actuary for the fund must use their latest assumption and cannot change it up or down to reflect changes in circumstances. So while they may expect to earn something, the filing does not allow them to reflect those potential earnings. So don’t pick on funds, actuaries and attorney who are doing everything correctly. Pick on the law which requires these assumptions to be used.

    Reply

  4. […] plans were asking from the government under the PBGC Special Financial Assistance program I noticed that the Carpenters Industrial Council of Eastern PA Pension Plan was looking for much more money […]

    Reply

    • Posted by aon12345 on November 9, 2021 at 3:13 pm

      your statement makes no sense, in the chart above you show that only 5 plans are asking for less money than Easter PA carpenters. The vast majority are asking for far more money – into the hundreds of millions compared to just $14 million. So how can you say you noticed they were looking for much more money when in fact they are one of the least?????

      Can you really not read your own charts??

      Reply

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