Market turbulence, drop in members' TV earnings may spur more cuts

Driven by tough economic times and a drop in TV earnings, the Screen Actors Guild health and pension plans are tightening eligibility requirements and benefits, and have warned members that further cuts may be coming.

The trustees of the plans, overseen by reps of SAG and the majors, announced the changes in a newsletter that began arriving in participants’ mailboxes this week. The changes take effect Jan. 1.

“The Health Plan remains in a deficit situation as television contributions have continued to steadily decrease andthe cost of providing federally mandated benefits is increasing,” the newsletter said.

The health plan — covering about 40,000 participants — is increasing qualification levels by 2% to $30,750 for Plan I and $15,100 for Plan II. The individual out-of-pocket maximum is going up by $500 to $1,750 and the family out-of-pocket maximum is rising by $1,000 per family to $3,500.

The trustees, which had announced an annual $1,000 hike in the earnings requirement in 2009 for pension credits, also disclosed that the $20,000 threshold requirement would become effective on Jan. 1, 2012, instead of 2013.

The changes come two months after SAG disclosed its reported TV earnings for 2010 dropped 8.2% last year to $564.8 million in 2010 — 24% below 2007 levels — while overall earnings rose 3.9% last year to $1.986 billion. The split in primetime jurisdiction between SAG and AFTRA, which has signed the lion’s share of new shows, reduces the chances that rank-and-file members can earn enough to meet the earnings thresholds and adds momentum to the push for merger with an eye toward subsequently merging the health plans.

The newsletter noted that the pension plan had been certified in the “green zone” for 2010 with an 83% funding level due to favorable returns on investments and federal legislation enacted to allow plans to recover from losses during the 2008 financial crisis. But the outlook for the near term is troubling.

“Investment returns for 2011 are currently below what is needed to keep the plan certified in the ‘green zone’ for the long run,” the newsletter said. “The health of the Pension Plan is driven by investment returns and when the markets are not performing well, the trustees must make changes to ensure the plan does not fall into the red zone.”

And though the trustees didn’t offer specifics, they also said that they may have to take similar steps. “The Trustees continue to monitor expenses, contributions and financial returns for both the Pension and Health Plans and unfortunately if the unfavorable trends do not improve, additional benefit modifications may have to be made,” the newsletter said.

The impact of the declining TV earnings for SAG thesps came into sharper focus a year ago when the SAG-industry health plan notified its 40,000 participants that it would cut benefits, hike premiums and tighten eligibility this year. The SAG plan said at that point that it was facing a $30 million deficit in 2010 with projections of a $50 million deficit this year due to three major factors: increased costs of complying with the new health care reform bill and other governmental regulations, the need to divert contributions from the Health Plan to the Pension Plan to improve its funding after the financial market collapse of 2008, and reduced employer contributions from SAG’s TV work.

The new SAG/AFTRA master contract, ratified in January, included a hike in pension and health contributions from 15% to 16.5% — 9.75% for health and 6.75% for pension for SAG.

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