August 5, 2020
Treasury Staff Will Recommend Denying the AFM-EPF’s MPRA Application
In December 2019, the American Federation of Musicians and Employers’ Pension Fund (AFM-EPF, the Plan) filed an application with the U.S. Treasury Department to reduce benefits under the Multiemployer Pension Reform Act (MPRA) in an attempt to save the Plan and avoid insolvency. Treasury has a deadline of August 11, 2020 to decide whether to approve or deny our application.
Treasury Staff recently advised the AFM-EPF that it disagrees with two of the actuarial assumptions used in our application. On this basis, Treasury Staff will recommend that the Secretary of the Treasury deny the application.
We strongly disagree with Treasury Staff’s conclusions. We have sent a letter to Treasury Secretary Steven Mnuchin conveying this message and asking him to overrule the expected Treasury Staff recommendation and not deny the application. Please view the August 5 issue of Pension Fund Notes for more information. You can also view the letter that was sent to Secretary Mnuchin
June 9, 2020
Snitzer and Livant v. The Board of Trustees of the American Federation of Musicians and Employers’ Pension Fund, et al., No. 1:17-cv-05361-VEC.
As you may know, two participants brought a lawsuit against certain current and former Trustees of the American Federation of Musicians and Employers’ Pension Plan. The Federal District Court in New York has preliminarily approved a proposed class action settlement of that lawsuit.
If you were a participant or beneficiary in the Plan at any time during the period from August 9, 2010 through May 18, 2020 you should receive a copy of the notice approved by the Court describing the proposed settlement and your legal rights and options. That notice, as well as other case documents, have been posted to a settlement website, which you can view at www.afm-epfsettlement.com
Settlement Reached to End Litigation Against AFM-EPF Trustees
On March 25, 2020, a settlement was reached in the July 2017 litigation filed against certain current and former AFM-EPF Trustees. The defendants continue to deny all plaintiffs' claims, and nothing in the settlement is an admission of any fault.
In fact, Phyllis Borzi, the former Assistant U.S. Secretary of Labor under President Obama – who was the top government official responsible for enforcing fiduciary obligations, and who the plaintiffs describe as "viewed as a champion of pension holders rights" – concluded that the Trustees did not breach their fiduciary duty in connection with the Plan's asset allocation. She further opined that the Trustees' decision-making process met or exceeded industry standards of prudence. Similarly, Cary Franklin of Horizon Actuarial Services – one of the most respected actuaries in the multiemployer plan community – concluded that the Trustees' asset allocation decisions represented reasonable measures and that the "Trustees' process was second to none."
Under the settlement, which is subject to court approval, a payment will be made by the defendants' fiduciary insurers into the Plan. The settlement also provides for the Trustees to implement a number of mutually agreed-upon Plan governance provisions.
As is clear from Ms. Borzi’s and Mr. Franklin's conclusions, we have always taken our fiduciary responsibility seriously and acted prudently in the best interests of all Plan participants. We are pleased that two and a half years of litigation has been brought to a close, and that a needless, costly and disruptive court battle can be avoided. Having put this significant distraction to rest, we will continue to maintain a singular focus on the vital mission of preserving the Plan's solvency for all active participants, retirees and beneficiaries, now and in the future.
All active participants, retirees and beneficiaries of deceased participants should be receiving an official "Notice of Proposed Class Action Settlement" in the coming weeks, which contains a more detailed summary of the terms of the settlement. The Notice will advise participants to whom they should direct their questions about the settlement.
US. Treasury Department Reopens MPRA Application Comment Period through April 20
The U.S. Treasury Department has reopened the public comment period for the AFM-EPF's MPRA application. The comment period will remain through Monday, April 20, 2020.
If you wish to submit a comment, click here
to open the Regulations.gov website and click on the "Comment Now!" button. After writing your comment (or uploading it as an attachment), you may enter your name or leave it blank to remain anonymous.
[Note: As of March 20, the due date listed below the "Comment Now!" button still says that comments are due by March 2, 2020. You can ignore this. Treasury is accepting new comments.]
We encourage participants to submit comments on the MPRA application. As a reminder, you can click here
to view the application in full.
AFM-EPF Submits MPRA Application to U.S. Treasury Department
On December 30, 2019, the AFM-EPF submitted an application to the U.S. Treasury Department to reduce benefits under the Multiemployer Pension Reform Act (MPRA) in order to prevent the Plan from becoming insolvent. We know that our participants have anticipated this difficult moment for some time. Now that the application has been completed and submitted, we can provide important information about how each participant would be affected by the proposed benefit reductions if the application is approved by Treasury.
On January 6, 2020, the Fund Office mailed a packet of information about the MPRA application to all participants and beneficiaries of deceased participants. This mailing includes three documents, all of which are important for participants to read in full:
- Personal Benefit Estimate Statement ? Personalized statement showing your estimated benefit as of January 1, 2021 should the reduction be approved and go into effect
- "Difficult Choices" Newsletter ? Overview of what's happening and why
- Official Notice of Proposed Reduction ? Official notice of the Plan's application to reduce benefits, including important information about your rights
In addition to the copies that participants will receive via U.S. mail, the "Difficult Choices" Newsletter and Official Notice of Proposed Reduction referenced above are available now on the Recent Mailings
page of the Plan website, under the "Stay Informed" tab.
Participants who have registered on the Plan website can access their Personal Benefit Estimate Statement by logging into the Participant Portal
and clicking on the MPRA Benefit Estimates icon. Participants who have not yet registered may do so by clicking here
or by clicking on the link in the heading of the Plan website.
We will continue to keep participants informed throughout the MPRA process via the Pension Fund Notes
e-newsletter. We will also maintain resources on the Plan website, including the Frequently Asked Questions
page and the MPRA Benefit Reductions page, which contains a description of each component of the proposed benefit reduction.
AFM-EPF Enters "Critical and Declining" Status – Trustees Will Apply to Treasury Department to Reduce Benefits Under Multiemployer Pension Reform Act
At the May meetings of the Board of Trustees of the American Federation of Musicians and Employers' Pension Fund, our actuaries advised that the Fund is entering "critical and declining" status for the plan year beginning April 1, 2019. This means that the Fund is projected to run out of money to pay benefits (or become "insolvent") within 20 years. Because the Fund is entering critical and declining status, the Trustees are now able to, and now intend to, apply to the government to reduce earned benefits in order to prevent the Fund from becoming insolvent.
Please view the May 24 issue of Pension Fund Notes
for information on what this means for participants.
Tell Congress to Protect Your Pension Benefits
In February 2018, Congress established a bipartisan Joint Select Committee on the Solvency of Multiemployer Pension Plans. This Committee is tasked with producing legislation by November 30, 2018 to address the dire solvency issues facing over 100 multiemployer pension funds across the US, such as the American Federation of Musicians and Employers' Pension Fund (AFM-EPF).
The Fund has set up a webpage with more information on the Joint Select Committee and how participants can make their voices heard in Congress. Click here
to learn how you can contact your own Members of Congress and the Joint Select Committee.
The voices of our 50,000 participants and those of other funds facing insolvency will be crucial in persuading members of the Joint Select Committee to act this year to produce and pass legislation that fully and fairly solves this crisis.
AFM-EPF Remains in "Critical" Status for Another Fiscal Year Due to Higher Than Expected Investment Earnings
At the May 24, 2018 meeting of the Board of Trustees of the American Federation of Musicians and Employers' Pension Fund, our actuaries advised that better than expected investment earnings will keep the Plan in "critical" and not yet "critical and declining" status for another fiscal year.
Please view the May 24 issue of Pension Fund Notes
for information on this determination of status and what it means for participants.
AFM-EPF Holds Q&A Webinar for Fund Participants
On Monday, January 29, the AFM-EPF held a Q&A webinar for Fund participants. Fund Trustees, Staff and Plan Advisors answered questions submitted by participants in real time.
to listen to the webinar.
A lawsuit was filed by two participants against the Trustees and the Executive Director challenging, among other things, certain investment decisions on behalf of the Fund. On behalf of the defendants, the Executive Director issued the following public statement:
The lawsuit filed against the Board of Trustees and Executive Director of the American Federation of Musicians and Employers' Pension Fund is entirely without merit. The Board of Trustees and staff of the Fund have always taken our fiduciary responsibilities very seriously. Every step of the way, we have consulted with respected and experienced investment experts in the industry, closely reviewed investment options, and always acted in the best interests of the Fund's nearly 50,000 participants and beneficiaries.
The lawsuit is directed at the performance of fund investments. But there are many other causes of the Fund's present financial predicament. Many multiemployer pension plans across the nation are struggling with a similar "perfect storm" of challenging factors. These include the volume of Baby Boomers taking retirement; more benefits being paid out to retirees and beneficiaries than contributions coming in from actives; and significantly longer pay-outs because participants are thankfully living longer. Additionally, two major recessions since 2000, the one in 2008-09 being of epic proportions and causing the collapse of financial markets worldwide, have profoundly impacted pension plans across the nation.
The Trustees, Executive Director and staff of the Fund have responded prudently to all challenges and have consistently based their decisions on the counsel of proven investment advisors and actuaries.
We will vigorously contest this lawsuit, and expect to prevail. Our focus will continue to be on doing everything we can to preserve the hard-earned benefits of our participants and beneficiaries.