Members of Hollywoods below-the-line unions worked a record 100.5 million hours last year, but their underfunded pension plan has inched a little closer to “critical” status. Trustees of the Motion Picture Industry Pension Plan, however, stress that theres no cause for alarm and that their members pensions are secure well into the future.
According to the plans latest funding notice, its funding level has dipped to 66.8% – bringing it closer to “critical” condition, which by federal law is anything below 65%, as measured by a plans assets divided by its liabilities.
Its a new low for the MPIPP, which fell from 80.8% in 2015, to 76.8% in 2016, to 67.4% in 2017 – and now to 66.8% as of January 1, 2018, the last valuation date. The plans actuary, however, projects that it will be back to 80% funded by 2026 and 100% funded by 2032.
The record 100.5 million hours worked — based on employer contributions to the plan –is evidence that production here is booming, thanks in large part to state tax incentives and so-called “Peak TV,” which has been fueled by ever more cable and streaming services producing ever more content and jobs.
So far, however, that hasnt turned around the declining fortunes of the MPIPP, but its trustees say that the turnaround is coming – and that it will be jumpstarted by pension funding gains made by IATSE, Teamsters Local 399 and the Basic Crafts in their recent deal for a film and TV contract. Rescuing the underfunded pension plan was one of the chief goals of those negotiations, and trustees say that the new contract will do just that.
“The plans are secure, the funding is stable, your retirement is safe,” trustee Rebecca Rhine, national executive director of IATSE Cinematographers Local 600, said in a recent message to her members. “There is nothing in this report that is unexpected or inconsistent with what was discussed and reported during ratification of the Basic Agreement.”
The decline in the funding percentage, she said, is “the predicted outcome” of implementing a 10% pension increase in 2017. “The pension plan remains in the green zone,” she added.
Year-end fair market value of the plans assets was almost $3.8 billion as of December 31, 2018 – down $55 million from the year before but up more than $370 million from the year before that. The assets actuarial value, which are estimates, was nearly $4 billion at the beginning of last year, and its liabilities were almost $6 billion, about $1 billion more than two years earlier.
A major source of income for the plan is residuals from the secondary reuse of films and TV shows. Unlike the talent guilds, which all have higher funding levels than the MPIPP, residuals are not paid directly to below-the-line crewmembers, but go directly into the plan.
Rhine said that in 2018, those residuals were higher than expected, totaling more than $450 million and “exceeding assumptions by $20 million.” Of that, she said, $225 million will be needed to fund the pension plan for 2019, with the remaining $225 million going into the plans reserves.
IATSE says that the new contract is also expected to generate an additional $153 million over three years for the unions health plan.
Under federal pension law, a pension plan is considered to be “endangered” if its funding percentage is less than 80%, but under a law enacted in 2014, a plan funded at less than that will not be treated as endangered if its actuary certifies – as the MPIPP actuary has – that its projected to be funded at more than 80% in 10 years.
Some opponents of the new IATSE contract point to the Plans declining funding level as proof that they were right about its shortcomings, but none of the funding gains contained in the three-year contract – which took effect last August 1 – have been factored into the latest funding percentage.
“We should be vigilant about protecting our benefit plans,” Rhine said, “but we should not succumb to scare tactics and misinformation. Increasing the pension was a planned event and rebuilding the funding is a planned event. ARead More – Source