After years of debate and planning, leaders of the Screen Actors Guild and the American Federation of Television & Radio Artists now appear to be at loggerheads over the proposed merger of their unions.
Leaders of both unions moved closer last week to sending out a referendum that would allow their members to decide if the unions should merge, but at the same time they moved farther apart on how best to accomplish that merger.
The unions' leaders, in fact, are now clearly polarized over a key question: Should they merge even if their pension plans--which are separate entities from the unions--cannot find a way to merge?
On Saturday, AFTRA's national board of directors voted overwhelmingly to send a merger referendum to AFTRA's members--a move that mirrored a step taken by SAG's board a week earlier.
AFTRA's leaders, however, have made it clear that, while they continue to support a merger of the unions, they do not favor a merger of the union's pension plans, each of which has assets of more than $1.4 billion.
SAG leaders, meanwhile, have now gone on record saying that they prefer a merger of the unions only if their pension plans merge, as well.
On Jan. 15, AFTRA president Shelby Scott and AFTRA national executive director Bruce York sent a letter to SAG president Richard Masur and SAG national executive director Ken Orsatti saying that if talks to merge the unions are to progress, "we should be looking much more carefully at the option of maintaining two separate (pension) plans than merging those plans."
On Saturday, a key AFTRA pension plan official put it even more bluntly, telling The Hollywood Reporter that there now appears to be no way to affect a satisfactory merger of the pension plans, and that the unions, if they still want to merge, should consider alternatives that do not include merging the pension plans.
"The AFTRA trustees of the AFTRA Health & Retirement Funds have discussed the proposed merger of the pension plans in detail," said Bill Hillman, the senior union trustee on AFTRA's H&R Funds. "I am aware of no AFTRA union trustee who thinks there is any possibility of such a merger because of funding problems. That is the reason we have been interested in exploring other alternatives."
Roots of "Funding Problems"
The "funding problems" are complex, but they have their roots in the fact that AFTRA's pension plan is fully funded, while SAG's has an unfunded liability. Both methods of funding are perfectly legal and proper, but they have produced two very different types of pension plans.
SAG's Masur and Orsatti, however, believe that these differences can be overcome--and must be overcome if the unions are to merge.
Masur and Orsatti, in a Jan. 20 letter to Scott and York, wrote: "It seems unwise to focus so heavily on the differences in degree of funding when both plans' funding is ample. If two plans need to be identically funded in order for it to be in the best interests of the participants to merge, few if any mergers would ever occur."
"Neither current (pension) plan," Masur and Orsatti stressed, "is inadequately funded."
For SAG officials, funding is not the only issue that should be on the table. They maintain that there are other significant factors that offset AFTRA's superior funding--factors that they believe make SAG's pension plan better than AFTRA's.
SAG officials point out that AFTRA's pension plan participants are "older and therefore (will be) more expensive to a merged plan than SAG's plan population would be. Further, the SAG contribution rates are higher than AFTRA's. As a result, if the funding were equal from both plans, SAG contributions would be subsidizing the benefits to AFTRA participants after the merger."
An AFTRA source acknowledged that while it is true that AFTRA's pension plan participants are older than SAG's, the average age of AFTRA's participants is dropping faster because of an infusion of a large number of young recording artists into the plan.
The AFTRA source also said that even though the fixed percentage of earnings that employers contribute to SAG's pension plan are higher than the fixed rate for AFTRA's plan, "AFTRA's average earnings are higher, and most of our major contracts have no caps on the earnings on which contributions are made by employers, while SAG has (contribution) caps on most, if not all, of its contracts."
Merger Without Merged Plans
In their Jan. 15 letter, AFTRA's Scott and York said that the two pension plans should continue to operate separately even if there is a merger of the unions because members of both unions, who receive minimum and maximum pensions from both plans will receive higher benefits if the pension plans are not combined.
Masur and Orsatti, however, said that those comments "seem to be based on conclusions drawn largely from the perspective of a participant who enjoys benefits from both plans now. It is possible that some alterations could affect at least some of these negative results, but we must also consider participants who currently are vested or eligible for only one plan.
"It is not only the combined minimum pensions that should be compared to the proposed new minimum, but also the minimum available to the participant who qualifies only for one of the two plans. Likewise, combining the two maximum pension amounts would apply to a small minority of participants."
Though opposed to merging the pension plans, AFTRA's trustees have suggested that the pension plans consider several alternatives.
In response to AFTRA's proposal to operate separate plans and then gradually make them more similar, Masur and Orsatti write that this is "highly impractical and unlikely."
As for AFTRA's proposal to freeze the current plans and start a third, new plan, Masur and Orsatti said that this is problematic because "maintaining the funding of frozen plans is difficult" and would result in "costlier administration." Under such a system, they said, "future benefits cost more since there is no surplus for these benefits," and noted that it is "difficult to give retroactive benefit increases (because) no contributions are available for past benefits."
As for improving AFTRA's benefits until AFTRA's funding becomes equivalent to SAG's--and then merging the plans--Masur and Orsatti wrote that this "increases (the) degree to which SAG would be subsidizing AFTRA."
SAG officials, however, see none of those alternatives as viable.
Based on these "drawbacks," Masur and Orsatti said, "we continue to believe merger of the SAG and AFTRA plans is a preferable course to benefit all plan participants."
Despite their differences, SAG and AFTRA leaders do agree on one thing: More meetings are needed to see if these differences can be overcome.
David Robb writes for The Hollywood Reporter.