Economy shakes up AFTRA pension plan
Union changes participation threshold, benefits formulaThe American Federation of Television and Radio Artists addressed the worsening economy’s effect on the union’s policies at its national board meeting Saturday night.
In preparation for formal notification in early April, national president Roberta Reardon sent a letter to AFTRA members over the weekend explaining coming changes in the union's health and retirement funds designed to protect the pension plan during the downturn. AFTRA's pension-plan investments, run by Segal Advisors in Boston, lost 23.4% of their value in 2008, coming down from a peak of about $2 billion.
The Trustees of the AFTRA H&R Funds, which represent the union and its signatory employers, delivered a report to the national board and voted to establish changes in the minimum threshold for participation and the formula used to calculate pension benefits.
On Dec. 1, the minimum annual earnings threshold needed for a pension credit will double from $7,500 to $15,000. The new limit puts the AFTRA requirements closer in line with other industry plans. Members still need to acquire five vested pension credits, which needn't be consecutive, to partake in the retirement plan, and the benefit structure itself will not change.
Currently, about 7,000 members actively partake in AFTRA pension benefits, with thousands of others having earned credits on their way to participation. Board members do expect that the higher threshold will affect the number of members who are able to participate in the fund, though no study has yet determined how much.
The formula for how pension benefits are calculated will shift from a system based on how much a member earned on a job to one based on what that employer contributed to the H&R Funds on the member's behalf. The earnings model dates back to the 1950s.
Since each signatory employer signs a contract with its own contribution percentage, the members' employer contributions will be more variable, as opposed to a flatter contribution based solely on income.
"Moving to a contribution-based model means that members who work under contracts with higher contribution rates will get credit for the larger contributions their employment generates," Reardon wrote in her letter. "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."
This formula change will go into effect May 1.
The details of both changes have been posted on AFTRA's Web site.
"The higher earnings threshold is a painful but overdue step that the trustees believe will also help our retirement plan to weather what most experts agree will be a difficult economic environment for the next few years," Reardon wrote. "To its credit, the AFTRA Plan has followed a smart, stable and diversified investment strategy. But 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.
"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."
On another front, AFTRA championed its recent moves to organize audiobook companies Audible.com and Gildan Media, for whom its members do recording work. The union achieved contracts that established payment minimums and pension and health care contributions that begin to address the world of digital downloads. Additional negotiations with other companies are ongoing as well as an educational campaign to inform members and publishing entities.
Meanwhile, joint negotiations with SAG for a new commercials contract continue in New York. Discussions with the JPC began in February; the current contract, which has been extended twice, expires March 31.