Group fires off letter attacking plan's formula

A group challenging changes to the Directors Guild of America pension plan sent out another letter to members, questioning the plan’s new formula and its benefit to lower-earning participants.

But the officials with the guild and the DGA-Producers Pension and Health Plans are dismissing the letter, saying that it contains “half-truths, inaccuracies and erroneous conclusions.”

The dispute is part of an ongoing federal legal challenge to a revised pension plan that was put into effect in 1994. The Save Our Pension Committee filed suit in 1994, charging that the changes in the guild’s basic pension plan primarily benefit high-earning directors and could drastically alter individual benefits.

“The basic pension plan was designed to benefit lower-earning participants,” the letter from Save Our Pension Committee states. “Once credited with a month of service, all participants received the same benefit for that service. That founding principle of the Basic Pension Plan has been abandoned.”

Career averaging

The DGA’s basic pension benefits used to be determined by credited service, essentially the amount of time each member was employed. The new formula distributes benefits based on career average earnings.

The group also contends that the change in the pension plan should go to a vote of the membership, not by the Pension Plan trustees. “All the lawsuit is about is being able to take a vote,” said Thompson O’Sullivan, a unit production manager who is part of the committee challenging the plan. There is a dispute over whether the plan could go to a vote: It is a separate operation from the DGA, and includes both studio and director reps.

According to DGA officials, the plan was altered because a disproportional number of participants who made minimal earnings were benefiting from the pension plan. As an example, an individual who was earning as little as $10,000 per year for his or her career could retire on a $21,000-per-year pension. Others, meanwhile, were taking a 50% to 90% reduction in compensation upon retirement.

Missing the mark

DGA officials contend that the group is off the mark in their letter. As example, they point to the group’s contention that 94% of the participants rated a lower pension under the new formula. Those figures, according to DGA officials, are based on a consultant’s study in 1994 of the revised plan that was later changed and no longer exists. And they cite figures, the DGA notes, of a participant base of 13,000, almost 2-1/2 times the size of the active participant base. Many of those that they include, the DGA says, never would have qualified under either plan.

Of 341 participants who retired with a pension from the basic plan, the majority were receiving a higher pension under the new formula, according to pension plan officials. Only 35 retirees received a lower pension than if the previous formula were continued. No one’s pension was lowered from what they had accrued under the old formula, they say.

A federal judge in 1995 denied a DGA motion to dismiss the suit, and it was moved from New York to Los Angeles. But last year, the group was denied a motion to make it a class action suit, according to the DGA, and it is now in its discovery phase. The DGA plans to file a motion for summary judgment this summer.

“These are desperate people who are seeking to get pensions for themselves that are greater than the amount they earned when they were working,” a DGA spokesman said. “They have had no success in their lawsuit, their motion for class certification was denied and they have no evidence to support what they allege.”

The attorneys for Save Our Pension Committee, Leonard Flamm and John Weiss, could not be reached.

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