Recently, newsletters went out from the Motion Picture Industry Pension and Health Plan informing participants that the Defined Benefit Plan (one of two pensions in the Trust) have fallen into the "Endangered" category.
I've gotten numerous questions about it from people working at various studios, but what does "Endangered" mean exactly? ...
In 2006 the Feds passed "The Pension Protection Act of 2006" stipulating that private pension plans meet certain benchmarks, to wit:
1) If a Pension Plan has 80% (or higher) funding, it's "Healthy" (The Green Zone.)
2) If a Plan has lower than 80% funding, it's "Endangered." (The Yellow Zone.)
3) If a Plan has 60% (or lower) funding, it's "Critical" (The Red Zone.)
Simple enough. So what's with the Motion Picture Industry Pension Plan? From the latest newsletter:
As of January 1, 2010, Plan funding was at 79.2% ...
In other words, funding is eight tenths of a percent out of the Green Zone, and the Plan needs to inform participants of that fact, and take corrective action.
The Pension Protection Act has had good and bad effects on pension plans across the nation. It's got more stringent rules than before (mostly good), and requires corporate plans to adhere more closely to clearer rules (clearly good), but it's given union and management negotiators less leeway to move dollars around when negotiating collective bargaining agreements because they always have to keep pension funding in mind (sometimes a mixed blessing).
According the the MPIPHP's acountants and financial advisors, the Defined Benefit Plan's funding is projected to return to green territory within the next couple of years. And the other Motion Picture Industry pension plan, the Individual Account Plan, is not "endangered" at all. The money in each account will remain there until participants reach retirement age and claim it.