August 11, 2020
U.S. Treasury Department Denies the AFM-EPF’s MPRA Application
Today, the U.S. Department of the Treasury officially notified the American Federation of Musicians and Employers’ Pension Fund (AFM-EPF, the Plan) that it has denied our application, which we filed to protect our Plan’s solvency by reducing benefits under the Multiemployer Pension Reform Act (MPRA). Treasury’s letter explained that its denial is based on a disagreement over the reasonableness of two of the actuarial assumptions used in our application. You can click here
to read Treasury’s letter.
Because of Treasury’s denial, benefits will not be reduced on January 1, 2021, and our Plan will continue its financial decline. To avoid insolvency, the Trustees have started working with their actuaries to prepare and file a second MPRA application.
As we discussed in the August 5 issue of Pension Fund Notes
, we maintain that Treasury was wrong to deny the application on this basis, but we are encouraged by the fact that Treasury Staff advised us verbally that it had no issue with any other elements of our application or our proposed benefit reduction plan.
We will keep participants updated on all of the Trustees’ efforts to preserve the Plan’s solvency for current and future generations of musicians.
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.