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AFTRA Health & Retirement Plan 'Examining Options' After Merger (Analysis)

SAG AFTRA One Union Logo - H 2012

It looks like the AFTRA health and retirement plan is reviewing the possibility of unification with the corresponding SAG plan, but the AFTRA plan is not ready to commit –- even through the union wants immediate interim action.

In the wake of a SAG-AFTRA board resolution Sunday urging that the SAG and AFTRA health plans “implement immediately a reciprocity agreement,” the AFTRA plan issued a non-committal statement Monday that may put the brakes on hopes for immediate change.

Improvements in pension and health – some form of unification or coordination – were priorities for many members who voted for merger.

STORY: SAG-AFTRA Board Urges Unified Pension & Health Plan

The AFTRA plan’s statement reads: “The Trustees of the AFTRA Health and Retirement Funds are examining and will continue to fully explore the options available to them following the merger of performer unions that created SAG-AFTRA on March 30. Any decisions made or not made by the Trustees of AFTRA H&R will continue to be guided by the best interest of the participants served by AFTRA H&R.”

Citing the confidential nature of trustee meetings, the SAG plan had no comment in response to an inquiry by The Hollywood Reporter.

As an interim step, SAG-AFTRA wants the two plans to implement health plan reciprocity immediately. That would increase performers’ access to health insurance by ameliorating the “split earnings” problem, in which members find the employer P&H contributions from their film and most commercial work flowing to the SAG plan, while the contributions from much of their TV work goes to the AFTRA plan.

That split can result in members falling short of required earnings thresholds for each plan even if their aggregate earnings would have met the applicable threshold if the plans were unified.

But the AFTRA Health and Retirement statement seems to signal that nothing is going to happen immediately – even though, as a source confirmed, the two plans have been in discussions.

STORY: Embattled SAG Pension & Health CEO Resigns

This is not the first time the AFTRA H&R trustees have thrown cold water on merger. In response to a study of merger feasibility that SAG and AFTRA commissioned during the union merger campaign, the trustees said, “the merger of pension and health funds as large and divergent as the AFTRA and SAG plans raises complex and unique financial, legal and benefit issues which can only be addressed through a comprehensive analysis performed by the funds.”

They added at the time, “No position has been, or will be, taken by the AFTRA Health & Retirement Funds Trustees or its co-counsel until such time as a comprehensive feasibility study is performed.”

The unions became one several months ago, but the two plans are legally separate from the merged entity, just as they were separate from the corresponding unions before merger. Half of the trustees are appointed by the union and half by management. Although SAG-AFTRA wants immediate and expeditious action, the dynamics are complex, since trustees have a fiduciary duty to act in the best interests of plan participants.

A possible difficulty is that some trustees may see the best interests of AFTRA participants as being different from what the union has advocated. Here again, complexity is the watchword. On the one hand, reciprocity or unification of the two sets of plans could reduce the split earnings problem.

But on the other hand, as a THR graphical analysis in March showed, the SAG pension and health plans have been on a sharp downward trend, with benefits decreasing, eligibility tightening and premiums increasing far more quickly than changes in the AFTRA H&R plan.

STORY: SAG Health Plan on Steep Downward Trend, While AFTRA Plan's Changes Are Modest (Graphical Analysis)

A key cause was the shift of new television work to AFTRA. That appears to have slowed, but with the legacy SAG and AFTRA contracts still in place, the two plans still have different – and divergent – sources of income. That isn’t expected to change until 2014, when the next round of studio negotiations will provide a forum for the union to push for a single, unified contract.

Another reason that AFTRA H&R trustees may be moving slowly is that the SAG P&H plan was rocked several months ago by series of allegations of misconduct, a filed (and still-pending) lawsuit and the April resignation of its embattled CEO.

The SAG plan’s economic and organizational difficulties may have become a stumbling block, although it’s impossible to tell.

The SAG-AFTRA board’s resolution was approved overwhelmingly on Sunday (99.47 percent in favor) and calls on the trustees of both plans to “implement immediately a reciprocity agreement between the two existing Health Plans” and to “undertake expeditious and appropriate action to create a unified Health Plan.”

The resolution also urged the trustees to review “the feasibility and advisability of creating a unified (pension plan) and reciprocity agreement between the existing (pension plans).”

Unifying the plans does not necessarily mean merging them. The exact form that any unification takes depends on complex actuarial and other factors. But whatever happens, immediate action may not be in the cards.

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Email: jhandel@att.net

Twitter: @jhandel