Put Your SFA Assets to Work
What’s your investment strategy?
To make the most of special financial assistance from the PBGC, invest wisely.
The special financial assistance (SFA) program offers an opportunity for plans in challenging situations to improve their financial position, especially now that the PBGC has clarified in its final rule that plans may invest up to 33 percent of SFA assets in certain “return-seeking investments” — publicly traded equities, equity funds and bonds.
Trustees of multiemployer pension funds that receive SFA face a key decision: how to manage the assets most effectively to maximize their value.
It’s important to balance:
- Asset allocation
- Cash-flow management
- Liabilities
- Funding level
To make the most of SFA, you need an investment strategy.
You also need the right investment consultant.
Choose the right investment consultant
We have the experience, staff and knowledge to help you maximize SFA assets within the guidelines and constraints imposed by the PBGC.
You’ll work with an investment consulting firm that:
- Knows the multiemployer landscape well
- Is a strong advocate for plans
- Is a recognized leader in the marketplace
Our approach
Segal Marco Advisors can help you manage SFA funds alongside pension plan assets.
As discussed in the video below, we believe these are the six components of a successful SFA investment strategy:
- Philosophy — We recognize that each multiemployer pension plan has its own characteristics, such as funding level, demographics, cash flow, liquidity and the size of SFA.
- Approach — We develop investment solutions that are customized for each plan, given current limitations on permissible assets for SFA, and are holistic in its attention to assets and liabilities.
- Objectives — The investment strategy must strike the proper balance between meeting the need to pay benefit obligations and building long-term financial security.
- Strategy — We structure an SFA portfolio that is focused on benefit-driven investing and a legacy portfolio that invests in return-generating assets.
- Asset allocation and implementation — To manage the overall portfolio (combined SFA and legacy), we consider the plan’s risk and liquidity profile to determine the role of existing and/or new managers and cost.
- Ongoing monitoring — Ongoing planning and reporting is key to long-term success, including monitoring implementation and exploration of a “glide path” as the plan matures.
Importantly, when you work with us, you can also draw on the expertise of Segal’s multiemployer retirement consultants for top-quality advice to best serve your plan and help you put SFA assets to work.
To hear subject matter experts from Segal and Segal Marco Advisors speak about SFA, listen to this August 2022 webinar recording.
The information and opinions herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This article and the data and analysis herein is intended for general education only and not as investment advice. It is not intended for use as a basis for investment decisions, nor should it be construed as advice designed to meet the needs of any particular investor. On all matters involving legal interpretations and regulatory issues, investors should consult legal counsel.
