Trustees of the American Federation of Musicians and Employers' Pension Fund, New York, said they will submit a second application to the Treasury Department to reduce benefits to prevent insolvency, as allowed by the Multiemployer Pension Reform Act.
The first application, submitted Dec. 30, 2019, for reductions beginning in January 2021, was denied for technical reasons related to the actuarial assumptions used in the submission.
According to a notice on the pension fund's website, trustees plan to submit a second application by the end of 2020 for a benefit reduction effective Jan. 1, 2022.
The application will address the technical issued raised by the Treasury Department and the basic formula for benefit reductions will be the same, but "unfortunately, the across-the-board flat percentage reduction to multipliers above $1 will be higher than the first application. This is due largely to how our industry has been affected by the COVID-19 pandemic," the notice said.
As of March 31, the pension fund had $1.8 billion in assets and about $3 billion in liabilities, with a funding shortfall of $1.2 billion and a funding ratio of 60%. For the fiscal year ended March 31, the plan paid out $185 million in benefits but received only about $76 million in contributions.