Reprinted from Deadline Hollywood by David Robb on December 10, 2020.
Trustees of the American Federation of Musicians’ pension fund told participants today that they will submit a second application to the US Treasury Department to reduce benefits to prevent the Fund’s insolvency within the next 20 years. If approved, the proposed benefit reductions would go into effect on January 1, 2022, and participants and beneficiaries of deceased participants will be notified early next month of their estimated reduced benefits — some by as much as 40%.
The Fund, which is currently in “critical and declining” status, is in trouble because as of March 2019, its $3 billion in liabilities exceeded its $1.8 billion in assets, meaning that it was underfunded by about $1.2 billion.
Last December, the American Federation of Musicians and Employers’ Pension Fund submitted its first application to reduce benefits under the Multiemployer Pension Reform Act (MPRA), but in August, the Treasury Department denied the application for technical reasons related to assumptions used in the application. Specifically, Treasury said that two elements of the application’s actuarial assumptions – the mortality rate assumption and the new entrant assumption – “are not reasonable under the standards in the regulations.” …