Archive for the ‘Actuarial Math’ Category

SFA Bailout: 0% = $6.1 Million

The Carpenters Industrial Council of Eastern PA Pension Fund is asking the government for $14,137,881 under the multiemplolyer bailout program. Template 4 of the application is where the requested amount is calculated. The PBGC provides that template and here is what I get from making up my own sheet* using the plan’s data with a 5.38% assumed interest rate for future earnings instead of 0%.

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My SFA Blunder, But….

In reviewing the amounts that insolvent multiemployer 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 when compared to their RPA liabilities then every other plan. I assumed this was a mistake in the 6/1/19 Schedule MB filing where the interest rate used for valuation purposes was left blank so 0% was used in the application calculation.

I now see my mistake. 0% was the interest rate they intended to use for the 6/1/19 valuation but how they got there makes what they did much worse, primarily for other actuaries.

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SFA First Withdrawal

The PBGC Special Financial Assistance program for troubled multiemployer plans now has 19 applicants as the first plan to apply became the first to withdraw:

Road Carriers Local 707 Pension Plan08/13/2021WithdrawnPDF

Here is how Local 707 explained it in an email blast and what I think happened.

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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.

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SFA Update and Detail

No new filings but the Teamsters Local 641 Pension Plan application was posted, coming in at a record 920 pages, so here is a listing of those 20 plans in the pipeline 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 SFA interest rate used to calculate earnings.

Then let’s look at how Local 641 arrived at their requested amount.

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Interesting SFA Rate Blunders

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. Now that most of the applications are online and the interest rates used for valuing SFA liabilities have been divulged the idiocy of the method the PBGC forces these plans to use comes into focus.

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.

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SFA Bailout: Tracking the Actuaries

Nineteen insolvent plans using 7 different actuarial places have now applied for the SFA bailout. In theory the calculations should come out the same whichever actuary you use but, in practice so far, there are differences among actuaries in how much bailout money plans are requesting compared to the unfunded liabilities they reported on their Schedule MBs.

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SFA Plans Requesting 80% of Unfunded Liabilities

Participants in multiemployer plans about to go bankrupt are fearing that the ARP bailout, based on the methodology that the PBGC has established to get the money, will not be enough. In comparing the requests of the first four plans for assistance to what those plans report as unfunded liabilities on their 5500 forms, the participants are right.

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NJEA SB Issue

The New Jersey Education Association (NJEA) is a billion-dollar enterprise that runs a good portion of the state backed by the union dues of its members who happen to be in the worst funded public pension system in the country. Yet the pensions of NJEA employees are both generous and well-funded.

However, in checking the plan’s 5500 filing for the year ended August 31, 2020, something unusual popped up on the Schedule SB. It looks like a filing error but who knows?

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GASB68 vs Politician Pension Numbers in NJ

Now that the 6/30/20 GASB68 valuations are out comparisons can be done with the official valuations for the New Jersey pension plans upon which recommended (and often ignored) contribution amounts are calculated.  Putting everything into a spreadsheet we find:

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