HOLLYWOOD — In a strong signal of mounting pressure on showbiz health and pension plans, the Retirement Plan for the American Federation of Television & Radio Artists has asked the IRS for significantly more time to improve the plan’s hobbled finances.

The AFTRA plan is specifically seeking permission from the IRS to extend the period over which it can amortize its funding shortfall caused by investment losses from the current 15 years to 25 years. The plan disclosed the request to plan participants last week via a mailed notification.

AFTRA’s plan manager Mario Bulding told members the move is necessary because of “substantial” stock market investment losses during the past three years.

Assets down

He did not specify the extent of those losses but a notice to members showed that, as of last Nov. 30, the fair market value of plan assets was $1.4 billion, about $280 million short of the $1.68 billion value of vested benefits.

Bulding also insisted the filing is not a request to cut benefits, which were reduced two months ago. “Quite the contrary, the Trustees believe that this application is in your interest because it allows more time for the Board of Trustees to reflect and address the long term funding needs of the Plan and, hopefully, for the Plan to recover from its recent negative investment experience,” Bulding wrote.

The AFTRA health and retirement funds are operated separately from AFTRA by equal numbers of trustees representing the union and companies. As of June 1, soaring costs forced the AFTRA retirement plan to slash the benefit accrual rate from 3% of earnings to 2% — meaning that the annual amount added to a member’s pension was cut by 33%. The trustees also eliminated the minimum guaranteed monthly pension for members who satisfied the requirements for a regular annuity.

Paying premiums

AFTRA health plan participants were also forced as of July 1 to start paying premiums for the first time on health insurance, with a $250 quarterly charge; members also saw the annual earnings requirement to participate boosted from $7,500 to $10,000.

The AFTRA retirement plan first sent out a notice — as required by law — that it had made a waiver application to the IRS to extend the number of years for amortizing unfunded liabilities for the plan year beginning last Dec. 1. That notice also said the IRS would consider any relevant information and gave instructions on how to take such a step, but it also said the IRS could not provide any information about the extension request itself.

Bulding, in what he called a “plain English” follow-up letter to participants, said, “Because of the weak economy and three years of significant, virtually unprecedented, stock market declines, the AFTRA Retirement Plan (like most other pension plans) has had substantial investment losses for the past three years.”

“When a plan suffers investment losses, there is a cost, which the law requires the plan to spread over a designated number of years,” he also said. “However, the law also provides that the plan can apply to the IRS for permission to spread the cost over a longer period of time. The IRS decides whether to grant this permission based on, among other things, whether it is in the interest of plan participants and beneficiaries to do so.”

Bad news and more

The disclosure of financial problems comes on the heels of AFTRA prexy John Connolly’s recent assertion that SAG and AFTRA are likely to seek larger employer health and retirement contributions in upcoming contract talks. And Connolly asserted that AFTRA leaders will be examining the bleak outlook for its health and retirement funds when they meet at the national convention in Nashville on Aug. 11.

“We will address the grim situation in our health and retirement funds brought on by the ravages of health care cost inflation and agonizingly slow recovery from three years of wreckage in the investment climate, with an eye to significantly increasing employer contributions to the AFTRA H&R funds,” he said in a message to the 70,000 AFTRA members.

The current producer contribution to the SAG and AFTRA funds is set at 13.3% of earnings in the commercial and the film-TV contracts. Negotiations on the ad pact, which expires Oct. 29, will start in early September; the film-TV contract concludes next June 30.

Changes sought

The unions have not disclosed their proposal for the ad contract, but sources within SAG and AFTRA have indicated the performers are seeking a boost in producer pension and health contributions, an annual increase of more than 4% in wage rates for commercials on major networks and a slightly lower annual increase in cable wages.

Soaring costs have forced trustees of the pension and health plans for SAG, DGA, WGA and Actors Equity to take similar steps in terms of cutting benefits and tightening eligibility. For example, SAG members have also been hit this year with the first-ever premiums and nearly 10,000 of the 30,345 eligible thesps have opted out.

Additionally, the question of combining the SAG and AFTRA pension and health plans generated angry debate during the recent campaign over merging SAG and AFTRA. A key part of the pro-merger campaign asserted that a single pension and health plan would benefit participants — an assertion disputed by management trustees of the SAG plan.

“A merger of the plans will result in subsidization of the AFTRA plans by the SAG plans and a decrease in benefits for SAG participants,” the management trustees said. Connolly and SAG prexy Melissa Gilbert had slammed the trustees as what they characterized as management meddling in internal union politics.