American Federation of Musicians and Employers' Pension Fund, New York, applied to reduce benefits to prevent insolvency, spokesman James Chase confirmed in an email.
The board filed its application with the U.S. Treasury Department on Dec. 30 to reduce benefits under the Multiemployer Pension Reform Act of 2014.
"Although reducing benefits will be painful, the trustees are seeking permission to do so because running out of money would mean a much greater benefit loss in the future," a notice on the pension fund's website said.
The pension fund's actuaries advised the board in May that the fund had entered "critical and declining" status for its fiscal year that began April 1 and is projected to be insolvent within 20 years.
The pension fund had $1.8 billion in assets and about $3 billion in liabilities as of March 31, 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.
"This negative cash flow is projected to continue — and worsen," said an FAQ page on the website.
If the proposed reductions are approved, about 53% of participants would see no reduction in benefits, while 45% would have their benefits reduced up to 19%. Less than 2% of participants would have their benefits reduced 20% to 40%.
Participants 75 to 80 years old are partially protected, using a sliding scale based on how close the participant is to age 80. Benefits won't be reduced for participants who are 80 years old or older.
If approved, the benefit reductions would go into effect Jan. 1, 2021.