HomeTheatre News
< Home | < News & EventsActors' Equity Association | News & Events

November 3, 2003

Take Action: Equity Members Urged to Contact Senate to Support Multi-Employer Plan Emergency Investment Loss Proposal

Actors' Equity is urging all union members who reside in California, Florida, Illinois and New York States to write to members of the Senate Finance and the Senate Health, Education, Labor and Pension Committees* to support the Multiemployer Plan Emergency Investment Loss Proposal - Section 2 of S. 1610 (Bayh/Kerry); and Sec. 708 of J.R. 1776 (Portman/Cardin).

The proposal would give multiemployer pension plans (such as AEA, AFM, AFTRA, SAG and the WGA) more time to absorb and respond to recent investment losses, by modifying funding regulations to allow the amortization of investment losses over a 30 year period.

Please fax or e-mail this letter to your Senator. For more information about the proposal, see text below.

Dear Senator ______:

As a member of Actors' Equity, the Union for Actors and Stage Managers in the U.S., I am writing to ask your help and support in passing the multi-employer plan emergency investment loss proposal (Section 2 of S. 1610). This provision is a critical one to unions like mine, whose members are covered by multiemployer pension plans.

Multiemployer plans are maintained pursuant to collective bargaining agreements between many different unrelated employers - generally within the same industry - and unions. These plans provide employees with the opportunity to be covered by a defined benefit plan that gives them "portability" to earn continuous benefits as they go from job to job within the same industry. Equity negotiates coverage for actors and stage managers, who work for many different employers (theatres, producers) within Equity's jurisdiction over time.

Multiemployer plans have a long history of sound, conservative funding and have never been a problem for the Pension Benefit Guaranty Corporation (PBGC). However, the almost unprecedented decline in the stock market over the last three and a half years has had a particularly adverse effect on many "mature" multi-employer plans. These plans, which have growing numbers of older and retired participants, depend greatly on investment returns to augment employer contributions. The impact of the stock markets' decline has been made worse for certain multiemployer plans because, in the 1990s, rising stock markets put pressure on plans to increase benefits or reduce contributions to avoid violating Internal Revenue Code deduction limits and triggering related excise taxes.

As a result, some multiemployer plans now face ominous near-term funding problems. Actuaries working with these plans report that approximately one-third of the plans could face funding deficiencies in the next several years. Further, this could seriously disrupt labor relations if unions must accept sharp cuts in benefits and wages in future bargaining in order to balance out skyrocketing pension contributions.

These plans have plenty of cash to pay benefits. If given the time, the unions can work with the employers and the plans' trustees to come up with sustainable, long-term solutions by adjusting future benefits and/or contributions. The alternative - drastic changes in benefits and contributions and harsh penalties on employers - could be catastrophic to plan participants.

The multiemployer emergency investment loss proposal would provide multiemployer plans with time to develop long-term solutions by permitting them to amortize investment losses incurred between July 1999 and 2003 over 30 years instead of 15 years. This proposal is analogous to refinancing a mortgage. It would not excuse plans from paying promised benefits or in any way reduce the obligation of employers to fund them. It also would not reduce Treasury revenues. And because the PBGC's multiemployer pension guarantee program has a longstanding and growing surplus, this relief would not threaten the PBGC's financial condition.

We ask for your help and support in seeing that this critically important provision is passed this year.

We all need the House and Senate to take a real look at the lives of many millions of Americans who have simply been left out of the equation when it comes to the relief being offered only to single employer Funds. This is a crisis that, left unattended, will create problems far beyond imagining. Our thousands of members and hundreds of employers across this country whose lives will surely be greatly and negatively impacted will most certainly have this in the forefront of their minds this November and in election years to come.

I urge you to do the right thing and see that ALL Funds get the help we deserve and need to protect the pensions and health of all workers. It is hard to see how single employers deserve this relief and multiemployer plans do not. Please do all you can to right this wrong.

Thank you for your time and attention.

Sincerely,

Name
Member, Actors' Equity Association

Contact Information for Senate Finance and Health, Education, Labor and Pensions Committees*
*Committee members also include: Alabama, Arkansas, Arizona, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Missouri, Montana, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, and Wyoming

Senate Finance Committee
Phone: (202) 224- 4515
http://finance.senate.gov

Republicans State
Charles E. Grassley, Chair
Phone: (202) 224-3744
FAX: (202) 224-6020
E-mail: None Given
IA
Orrin G. Hatch
Phone: (202) 224-5251
FAX: (202) 224-6331
E-mail: None Given
UT
Don Nickles
Phone: (202)224-5754
FAX: (202) 224-6008
E-mail: None Given
OK
Trent Lott
Phone: (202) 224-6253
FAX: (202) 224-9450
E-mail: senatorlott@lott.senate.gov
MS
Olympia J. Snowe
Phone: (202) 224-5344
FAX: (202) 224-1946
E-mail: Olympia@snowe.senate.gov
ME
Jon L. Kyl
Phone: (202) 224-4521
FAX: (202)224-2207
E-mail: None Given
AZ


Independents State
James M. Jeffords
Phone: (202) 224-5141
FAX: (202) 228-0776
E-mail: None Given
VT


Republicans State
Craig Thomas
Phone: (202) 224-6441
FAX: (202) 224-1724
E-mail: None Given
WY
Rick Santorum
Phone: (202) 224-6324
FAX: (202) 228-0604
E-mail: None Given
PA
Bill Frist
Phone: (202) 224-3344
FAX: (202) 228-1264
E-mail: None Given
TN
Gordon Smith
Phone: (202) 224-3753
FAX: (202) 228-3997
E-mail: None Given
OR
Jim Bunning
Phone: (202) 224-4343
FAX: (202) 228-1373
E-mail: None Given
KY


Democrats State
Max Baucus, Rnk. Mem.
Phone: (202) 224-2651
FAX: (202) 228-3687
E-mail: None Given
MT
John D. Rockefeller, IV
Phone: (202) 224-6472
FAX: (202) 224-7665
E-mail: senator@rockefeller.senate.gov
WV
Thomas A. Daschle
Phone: (202) 224-2321
FAX: (202) 224-6603
E-mail: None Given
SD
John B. Breaux
Phone: (202) 224-4623
FAX: (202) 228-2577
E-mail: None Given
LA
Kent Conrad
Phone: (202) 224-2043
FAX: (202) 224-7776
E-mail: senator@conrad.sentate.gov
ND
Bob Graham
Phone: (202) 224-3041
FAX: (202) 224-2237
E-mail: None Given
FL
Jeff Bingaman
Phone: (202) 224-5521
FAX: (202) 224-2852
senator_bingaman@bingaman.senate.gov
NM
John F. Kerry
Phone: (202) 224-2742
FAX: (202) 224-8525
E-mail: john_kerry@kerry.senate.gov
MA
Blanche L. Lincoln
Phone: (202) 224-4843
FAX: (202) 228-1371
E-mail: None Given
AR


Senate Health, Education, Labor and Pension Committee Phone: (202) 224- 6770 http://labor.senate.gov

Republicans State
Judd Gregg, Chair
Phone: (202) 224-3324
FAX: (202) 224-4952
E-mail: mailbox@gregg.senate.gov
NH
John Ensign
Phone: (202) 224-6244
FAX: (202) 228-2193
E-mail: None Given
NV
Bill Frist
Phone: (202) 224-3344
FAX: (202) 228-1264
E-mail: None Given
TN
Lindsey O. Graham
Phone: (202) 224-5972
FAX: (202) 224-1189
E-mail: None Given
SC
Michael B. Enzi
Phone: (202) 224-3424
FAX: (202) 228-0359
E-mail: senator@enzi.senate.gov
WV
John W. Warner
Phone: (202) 224-2023
FAX: (202) 224-6295
Email: None Given
VA
Lamar Alexander
Phone: (202) 224-4944
FAX: (202) 228-3398
E-mail: None Given
TN
Christopher S. Bond
Phone: (202) 224-5721
FAX: (202) 224-8149
E-mail: kit_bond@bond.senate.gov
MO
Mike DeWine
Phone: (202) 224-2315
FAX: (202) 224-6519
senator_dewine@dewine.senate.gov
OH
Pat Roberts
Phone: (202) 224-4774
FAX: (202) 224-3514
E-mail: None Given
KS
Jeff Sessions
Phone: (202) 224-4124
FAX: (202) 224-3149
E-mail: senator@sessions.senate.gov
AL


Democrats State
Edward M. Kennedy, Rnk. Mem
Phone: (202) 224-4543
FAX: (202) 224-2417
E-mail: None Given
MA
Christopher J. Dodd
Phone: (202) 224-2823
FAX: (202) 224-1083
E-mail: None Given
CT
Tom Harkin
Phone: (202) 224-3254
FAX: (202) 224-9369
E-mail: tom_harkin@harkin.senate.gov
IA
Barbara A. Mikulski
Phone: (202) 224-4654
FAX: (202) 224-8858
E-mail: None Given
MD
Jeff Bingaman
Phone: (202) 224-5521
FAX: (202) 224-2852
senator_bingaman@binagaman.senate.gov
NM
Patty Murray
Phone: (202) 224-2621
FAX: (202) 224-0238
E-mail: senator_murray@murray.senate.gov
WA
Jack Reed
Phone: (202) 224-4642
FAX: (202) 224-4680
E-mail: None Given
RI
John R. Edwards
Phone: (202) 224-3154
FAX: (202) 228-1374
E-mail: None Given
NC
Hillary Rodham Clinton
Phone: (202) 224-4451
FAX: (202) 228-0282
E-mail: None Given
NY


Independents State
James M. Jeffords
Phone: (202) 224-5141
FAX: (202) 228-0776
E-mail: None Given
VT

MULTIEMPLOYER PLAN EMERGENCY INVESTMENT LOSS PROPOSAL

Background

Multiemployer plans are maintained pursuant to collective bargaining agreements between unrelated employers - generally within the same industry - and unions. Contribution rates, typically measured by the work of covered employees, are negotiated and set forth in collective bargaining agreements, which may run for up to six years.

By pooling the costs, multiemployer plans enable small employers to sponsor defined benefit plans for their employees. They also provide mobile employees with "portability" to earn continuous benefits as they go from job to job within the same industry.

Multiemployer plans have a long history of sound, conservative funding. They typically are more conservatively invested and funded than single employer plans. Their fortunes are not tied to the fate of a single corporation, but instead rest on a broad base of contributing employers.

Multiemployer plans have never been a problem for the Pension Benefit Guaranty Corporation (PBGC). They are covered under their own distinct PBGC pension guarantee program that is structurally very different from the PBGC's single-employer termination insurance program. In the 27-year history of the PBGC multiemployer program, only 31 plans have received PBGC assistance, and the program has a long-standing and growing surplus. Multiemployer premiums have been set at $2.60 per participant for over 20 years.

Problem

Over the past three and a half years, there has been an almost unprecedented drop in the stock market. This decline in equity values has affected all investors, including multiemployer plans. This has particularly disturbed the funding equilibrium of the many "mature" multiemployer plans. These plans, which have large numbers of older and retired participants, rely especially on investment returns to augment contributions generated by active participants' work.

Internal Revenue Code ("Code") deduction limits have added to the plans' current dilemma. During the 1990s, multiemployer plans (like other investors) generally achieved investment gains that far out-paced projections. At the same time, the robust economy meant more work for participants, which yielded extra contributions. As assets in these plans grew, many contributing employers risked becoming subject to excise taxes on previously bargained-for contributions that suddenly exceeded Code deduction limits. To avoid these excise taxes, the bargaining parties were forced to increase benefits or, in some cases, cut back on required contributions. When the stock market plummeted and the economy contracted, the plans had little cushion to absorb the losses.

Now, some multiemployer plans are facing ominous near-term funding problems. Actuaries working with multiemployer plans report that approximately one-third of the plans could face funding deficiencies, as measured by the rules in ERISA and the Code, in the next several years. For these plans' contributing employers, this would trigger significant excise tax penalties plus mandatory additional pension contributions -- on top of the contributions agreed to through collective bargaining.

These plans have plenty of cash to pay benefits. Given the opportunity, the bargaining parties can come up with sustainable solutions for the longer term by adjusting benefits and/or contributions going forward (benefits already earned cannot be reduced). The alternative - sudden and drastic changes in benefits and/or contributions and the possible imposition of harsh penalties on the employers - could be catastrophic both for the plans and for the industries that support them.

Proposed Solution

The multiemployer plan emergency investment loss proposal (Sec. 2 of S. 1610, as introduced by Senators Evan Bayh and John Kerry; and Sec. 708 of H.R. 1776, as introduced by Reps. Rob Portman and Ben Cardin) would give multiemployer plans more time to absorb and respond to recent investment losses. Specifically, the provision would modify the ERISA and Code minimum funding rules to give multiemployer plans a one-time option to amortize investment losses incurred between July 1999 and the end of 2003 over 30 years instead of over 15 years. All other funding rules would remain the same.

This proposal is analogous to refinancing a mortgage. It would not excuse any plans from paying promised benefits, or in any way reduce benefit liabilities and the obligations of the parties to finance them. And because the PBGC's multiemployer guarantee program is financially sound, giving the plans this extra opportunity would not imperil the PBGC's financial condition. The proposal simply provides time for the parties to solve their own problems.


to news & events home...