Trustees of the American Federation of Musician’s Employers Pension Fund have withdrawn their application to reduce benefits for nearly half of its 50,000 participants.
The Fund had applied to the Treasury Department for permission to reduce benefits because it had been projected to run out of money to pay benefits within 20 years. The Fund fell into “critical status” two years ago when its $3 billion in liabilities exceeded its $1.8 billion in assets, meaning that it was underfunded by about $1.2 billion.
The change in plans was made possible by the election of President Joe Biden and the $1.9 trillion American Rescue Plan Act (ARPA) he signed into law recently. After reviewing an actuarial analysis of the pension relief provisions contained in the Rescue Plan, the trustees decided to withdraw their application for the reduction and apply instead for financial assistance under ARPA, which, if approved, would allow the Fund to pay benefits for the next 30 years. ARPA provides lump sum grants to qualifying multiemployer pension plans which do not need to be repaid.
Musicians Union’s Pension Fund Again Seeks OK From Treasury Dept. To Cut Benefits To Prevent Insolvency Within 20 Years
“The Pension Benefit Guaranty Corporation (PBGC) is charged with issuing regulations detailing how ARPA’s pension relief provisions will be implemented,” the Fund told its participants today. “These regulations are important because the value of the financial assistance and whether it will provide enough money to pay benefits through 2051 or beyond depends on how ARPA is interpreted. The Trustees intend to advocate for regulations that accomplish the purpose of ARPA, which will allow plans to pay benefits through at least the 2051 plan year. The PBGC regulations will also determine when the Fund can apply for financial assistance under ARPA. We intend to apply as soon as possible.”
“Your advocacy helped bring about this moment,” the trustees told the participants. “Thank you again to all who made your voices heard with your elected officials. Moving forward, we will continue to share news and information about the status of the PBGC regulatory process, as well as the process and timeline the Plan must follow to apply for relief under ARPA. For now, we wanted to deliver this important and very welcome news to you immediately.”