American Federation of Musicians and Employers' Pension Fund, New York, submitted a second application to reduce benefits.
The first application, submitted December 2019, was denied by Treasury Department officials overseeing the Multiemployer Pension Reform Act over what they said were unreasonable assumptions on mortality rates and new entrants.
MPRA allows struggling plans to implement benefit reductions if they will prevent or delay plans from going insolvent.
As of March 31, 2019, 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%. It is projected to be insolvent within 20 years.
The first application proposed that about 53% of participants would see no benefit reduction, and 45% would have benefits reduced up to 19%.
The latest application projects that 55% would see no reduction but the needed cuts would increase. If approved, the plan would go into effect on Jan. 1, 2022.
In a letter to participants about the second application, pension fund officials said when the first application was denied, "our problems did not go away. In fact, they have worsened because the loss of work that has hurt so many also meant a significant reduction in contributions to the plan," they said.
"If we allow the Plan to fail, benefits would continue as usual for a while, but at the expense of those pensioners who come later," pension fund officials said in the letter. "By making this collective sacrifice now, we are doing our best to secure as much as possible for everyone."
