Cathy Repola, national executive director of IATSE Editors Guild Local 700, has told her members that despite what other IATSE local leaders are telling their members, the continuing decline in the funding percentage of the Motion Picture Industry Pension Plan “is cause for justifiable concern — and something on which we need to continue to stay diligently focused.”
According to the MPIPP’s latest funding notice, its funding level has dipped to 66.8% – bringing it closer to “critical” condition, which by federal law is anything below 65%, as measured by a plan’s assets divided by its liabilities.
It’s a new low for the Plan, which fell from 80.8% in 2015, to 76.8% in 2016, to 67.4% in 2017 – and now to 66.8% as of January 1, 2018, the last valuation date. The plan’s actuary, however, projects that it will be back to 80% funded by 2026 and 100% funded by 2032.
Repola, who was removed from the Plan’s board of directors last October by IATSE president Matt Loeb after she stood alone against him and the other Hollywood local leaders’ endorsement of the union’s new film and TV contract, said that contrary to what members have been told, the real reason for the latest decline was the -3% loss the Plan took last year in returns on investments – not the 10% pension increase they got in 2017.
She acknowledged that the Plan is still certified in the so-called “Green Zone,” meaning that their funding levels are not critical or endangered and should be able to meet all current and future obligations.
She also said that the Plan’s actuaries, financial managers and board of directors “are doing their due diligence to best protect the assets of the Plans. The pension plan is not on the brink of collapse or of becoming defunct. This drop in our funding percentage was predicted by the actuaries and was indicated in the actuarial chart that the IA and the Hollywood locals circulated during the ratification process, so this is not a surprise.”
She noted, however, that while the Plan’s actuary has projected that the Plan will be back in the 80% funding range by 2023 and at 100% by 2032, that this is predicated on the assumption that investment returns will average 7.5% increases in every year until then. But at the end of 2018, she said, “the net return in the pension plan was -3%.”
“We cannot lose sight that in last year’s negotiations we did not achieve the much-needed funding to secure the long-term stability of the pension plan,” she told her members. “I, and your board of directors, simply were not willing to endorse ratification while allowing the funding percentage to remain in this low range over the course of the three-year agreement. It is our responsibility during negotiations to secure additional funding from the producers to bolster revenue streams.
Last year, Plan participants – including members of the West Coast IATSE studio locals, Teamsters Local 399 and the Basic Crafts unions – worked a record 100.5 million hours. “This is good because it means many IA members are working — a lot,” Repola said. “However, more hours being reported does not fix the long-term funding problem of the pension plan.”
“There are only three sources of income into the pension plan: residuals, hourly contributions and investment returns,” she said. “It was agreed going into these negotiations that it was imperative to achieve new residual streams, but we concluded negotiations without doing so. We also did not propose an increase in the pension hourly contribution rate.”
Traditional residual, she said, “are reducing and flattening from motion pictures being sold on DVDs and free television, and we are not meeting our assumed investment returns. The producers need to put significantly more money into the pension plan. In the next negotiation cycle, we will face these same challenges. My focus and objective is to work in conjunction with the IA and the other local leadership to be united and to stand firm together – not only for a long-term funding solution that leaves our members’ future pensions reliable and secure, but also to put us in position to focus on negotiating for improvements rather than worrying about addressing funding issues.”
Repola’s take on the health of the pension plan stands in sharp contrast to that of Rebecca Rhine, national executive director of IATSE Cinematographers Local 600 and a member of the Plan’s board of directors. “The plans are secure, the funding is stable, your retirement is safe,” she told her members after the funding notice was released. “There is nothing in this report that is unexpected or inconsistent with what was discussed and reported during ratification of the Basic Agreement.” The decline in the funding percentage, Rhine said, is “the predicted outcome” of implementing a 10% pension increase in 2017. “The pension plan remains in the ‘green zone,’” she added.
Clarification: The story and headline have been updated to reflect the proper name of the Motion Picture Industry Pension Plan.