Org tightens eligibility requirements on plan
Citing major losses in the value of its investments, the pension plan for the American Federation of Television & Radio Artists has tightened eligibility requirements for vesting, accrual and participation.
The changes, announced Saturday by AFTRA president Roberta Reardon, will double the annual earnings threshold to obtain a vesting credit to $15,000. This revision, which won’t impact those already receiving a pension, goes into effect on Dec. 1.
The move comes as AFTRA’s retirement fund — which pays pensions to more than 7,000 individuals who have obtained five annual vesting credits — has seen the value of its assets decline 23.4% over the past year to about $1.53 billion. The fund is a separate entity from AFTRA and is operated jointly by trustees representing AFTRA and the industry.
“Like every other pension plan in the country — whether union, corporate or public sector — our plan has felt the impact of the current economic turmoil,” Reardon said in her message. “Although the investment markets will eventually recover, right now no expert can predict with certainty when that will happen. Given this unprecedented moment in our nation’s economy, our trustees’ highest priority is to act quickly, decisively and proactively to do what is necessary to ride out this downturn and safely position our retirement plan’s ability to protect us and grow in the future.”
Reardon announced the changes during an AFTRA national board meeting.
The eligibility change comes two months after the AFTRA Retirement Fund filed a federal lawsuit against JPMorgan Chase Bank over losses in millions of dollars that the plan sustained through the Sigma Finance hedge fund (Daily Variety, Jan. 30). The suit noted that creditors seized more than $25 billion of Sigma’s $27 billion in assets in September and October, leaving about $1.9 billion as security for about $6.2 billion in outstanding medium-term notes.
In addition, AFTRA and the Screen Actors Guild are facing pressure on a related front as the advertising industry has demanded at the current commercial contract negotiations that the unions agree to institute caps on employer health and retirement contributions. SAG and AFTRA have asserted that the ad industry is seeking to reduce those contributions by $20 million annually.
The unions have drafted a strike authorization letter for members but have also insisted that doing so is standard procedure at this point of bargaining. Negotiators, facing a March 31 contract expiration, launched their fourth week of talks on Sunday with a news blackout in place.
AFTRA national exec director Kim Roberts Hedgpeth noted that the American Federation of Musicians’ retirement fund recently announced a similar move in reducing benefits due to the deterioration of its assets. And Reardon touted the AFTRA pension plan for still having one of the lowest threshold figures among entertainment industry plans.
AFTRA also told members that the changes are not due to bad investments by the retirement fund, which is managed by Segal Advisers of Boston.
“In 2008, when the major markets were down more than 40%, the plan’s investments declined less than 24%,” it said. “Over the last three years the Retirement Funds total return puts it in the top 25% of multi-employer plans with a similar exposure to equity markets.”
AFTRA, which has about 70,000 members, also disclosed Saturday that the plan is changing its calculation of benefits from the current system based on how much money a performer earns. As of May 1, that calculation will be based on how much money an employer contributes — a move that’s designed to account better for the varying rates of employer contributions in AFTRA’s contracts.
“By factoring contribution percentage rates into your credits, your future credits will recognize this when you work under contracts with higher contribution rates — even though your earnings may have stagnated or actually fallen,” Reardon added.