Reprinted from Deadline Hollywood by David Robb on January 7, 2021.
The American Federation of Musicians and Employers’ Pension Fund again has applied to the US Treasury Department for permission to reduce benefits for nearly half of its 51,521 participants. The Plan is currently in “critical and declining” status, and is projected to run out of money to pay benefits within 20 years.
Under the Multiemployer Pension Reform Act, pension plans that are “critical and declining” can apply to Treasury for approval to reduce participants’ benefits by an amount sufficient to avoid insolvency. The Fund is in trouble because as of March 2019, its $3 billion in liabilities exceeded its $1.8 billion in assets, meaning that it’s underfunded by about $1.2 billion.
Back in August, Treasury denied the Fund trustees’ first request to reduce benefits, saying 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.” If approved this time, the benefit reductions would go into effect on January 1, 2022. …