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Trustees Of Musicians Union Pension Plan, Claiming “Victory”, Agree To $26.8 Million Settlement Of Suit That Accused Them Of Making Risky Investments

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Trustees of the American Federation of Musicians’ pension plan have agreed to a $26.85 million settlement of a category motion lawsuit that claimed they made a sequence of dangerous investments that endangered the pensions of 1000’s of musicians.

“The settlement is a victory for the Trustees, because the plaintiffs didn’t show their claims that the defendants had engaged in ‘dangerous’ funding decision-making,” the trustees stated in saying the settlement. “The Trustees settled as a result of at the very least $17 million in proceeds from the $26.85 million settlement could be paid to the Plan by the Plan’s fiduciary insurers. None of the present or former Trustees who’re defendants are paying a dime. The choice was to tug on this sideshow and permit the obtainable insurance coverage to be additional consumed by authorized charges and bills. Recall that the plaintiffs initially sought restoration of funding losses that they estimated to be within the lots of of tens of millions of {dollars}. The plaintiffs’ attorneys can pocket the steadiness of the settlement proceeds if it’s permitted—about $10 million. They’re those who profited through the use of their unsupported mudslinging to push this case to the eve of trial earlier than agreeing to accept a lot lower than they initially demanded.”

Associated Story

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Musicians Union’s Pension Plan Asks Treasury Department For Permission To Reduce Benefits In 2021

COPYRIGHT_BP: Published on https://bingepost.com/trustees-of-musicians-union-pension-plan-claiming-victory-agree-to-26-8-million-settlement-of-suit-that-accused-them-of-making-risky-investments/79253/ by Cecilia Jones on 2020-03-30T18:13:11.000Z

](https://deadline.com/2020/01/musicians-union-pension-plan-asks-treasury-department-for-permission-to-reduce-benefits-1202822935/)

[

Like many multi-employer pension plans, the AFM plan was hit arduous by the recession and market downturn of 2008. However the musicians’ plan was hit more durable than most, shedding 40% of its worth in 18 months.

It had a $122 million shortfall in 2016, and in January, the trustees requested the U.S. Treasury Division for permission to cut back 1000’s of musicians’ month-to-month pension advantages as a way to maintain the “crucial and declining” fund from changing into bancrupt throughout the subsequent 20 years. The plan is in bother as a result of as of final March, its $Three billion in liabilities exceeded its $1.Eight billion in property, which means it’s underfunded by about $1.2 billion.

The lawsuit, filed in July 2017 by musicians Andrew Snitzer and Paul Livant, claimed that the trustees made a sequence of dangerous funding choices within the years after of the 2008-2009 world monetary disaster that harmed the plan. The trustees deny these claims and keep that they “have all the time acted prudently, consulted with skilled funding consultants, intently reviewed funding choices, and acted in the very best pursuits Plan individuals.”

In a prolonged assertion, the trustees stated:

On Wednesday, March 25, we knowledgeable individuals {that a} settlement had been reached to finish litigation towards sure present and former AFM-EPF Trustees. That is excellent news. For greater than two years, patently false claims have besmirched our Pension Plan whereas the Trustees have been doing all the things doable to steer it towards monetary stability.

Throughout that whole time, the plaintiffs, Musicians for Pension Safety (MPS) and the politically motivated people behind it have tried to capitalize on that lawsuit to advance their self-serving agenda. We’ve made a great religion effort to not get right into a back-and-forth with these detractors, who’ve by no means superior any type of rational and achievable plan to deal with the challenges going through not simply our Fund, however the almost 120 different multiemployer pension funds from coast to coast coping with exactly the identical state of affairs.

All through the Plan’s troublesome occasions, as we’ve advised you earlier than, the Trustees have been working to extend contributions to the Plan and enhance its standing. Annual contributions rose considerably from $54 million in 2009 to $76 million in 2019, thanks largely to the Trustees mandating a 19.9% improve within the price of contributions and to Union negotiations with employers.

The brand new sources of streaming income negotiated by the AFM are notably useful now at a time when COVID-19 is decimating reside performances and new movie/TV recordings. The plaintiffs and MPS have completed completely nothing aside from sling mud and undermine these efforts.

MPS and the plaintiffs have all the time relied on wild claims and flashy language as an alternative of something resembling information or widespread sense, and their present framing of the settlement follows the identical drained playbook. The straightforward fact of the matter is that the plaintiffs didn’t show their case, not to mention obtain an “unambiguous victory.”

Right here is one thing it is best to know: Two of essentially the most outstanding and revered consultants within the pension area concluded that the Trustees went properly past what is anticipated of Trustees underneath the regulation and basic rules of fine conduct. Phyllis Borzi, the previous Assistant U.S. Secretary of Labor underneath President Obama – who was the highest authorities official liable for implementing fiduciary obligations, and who the plaintiffs themselves describe as “considered as a champion of pension holders rights” – concluded that the Trustees acted in step with their fiduciary obligation in reference to the Plan’s asset allocation. She additional opined that the Trustees’ decision-making course of met or exceeded trade requirements of prudence.

That is coming from the one who was liable for making these determinations for the Division of Labor. Cary Franklin of Horizon Actuarial Companies – one of the crucial revered actuaries within the multiemployer plan group – concluded that the Trustees’ asset allocation choices represented affordable measures and that the “Trustees’ course of was second to none.”

Like several authorized settlement, this one represents a compromise – on this case one that permits us to lastly put to relaxation this undermining distraction at an important second for the way forward for the Plan. Listed here are some information concerning the settlement: The professional opinions of Ms. Borzi and Mr. Franklin have been big hurdles for the plaintiffs, which demonstrated that the wild accusations coming from the plaintiffs and MPS had no evidentiary help.

The plaintiffs wanted to settle as a result of they weren’t going to win. The Trustees settled as a result of at the very least $17 million in proceeds from the $26.85 million settlement could be paid to the Plan by the Plan’s fiduciary insurers. None of the present or former Trustees who’re defendants are paying a dime. The choice was to tug on this sideshow and permit the obtainable insurance coverage to be additional consumed by authorized charges and bills. Recall that the plaintiffs initially sought restoration of funding losses that they estimated to be within the lots of of tens of millions of {dollars}.

The plaintiffs’ attorneys can pocket the steadiness of the settlement proceeds if it’s permitted—about $10 million. They’re those who profited through the use of their unsupported mudslinging to push this case to the eve of trial earlier than agreeing to accept a lot lower than they initially demanded. The construction of the Board is unchanged. Whereas the plaintiffs demanded the elimination of the Trustees, that didn’t occur. Neither is there any change in who appoints Trustees. The Trustees agreed to work with an skilled impartial fiduciary who will little question verify what Ms. Borzi and Mr. Franklin already did – that the Board makes use of a wonderful decision-making course of with respect to Plan investments.

Two Trustees who beforehand expressed plans to go away the Board – for causes having nothing to do with this lawsuit – will certainly accomplish that someday over the subsequent 18 months. The funding advisor who monitored our Outsourced Chief Funding Officer (OCIO) had seen its function already decreased by the Trustees – once more, having nothing to do with this lawsuit. This advisor has departed underneath the settlement.

The Trustees additionally agreed to some further reporting about Plan investments on their web site, a lot of which the Plan has already been offering to individuals for a while. One have a look at the Plan’s web site will present that the Trustees are already dedicated to offering individuals with full and full data on issues like investments (anybody can request any of the funding supervisor reviews going again six years) and the Plan’s standing, properly past what’s required by regulation. The truth is, the AFM-EPF is exclusive amongst multiemployer pension plans for each its stage of communication and transparency. Agreeing to those settlement phrases was an excellent deal for the Pension Plan and all of our valued individuals.

A very powerful results of the settlement is that the litigation is lastly behind us, so we will focus our full consideration on preserving the Plan’s solvency for all energetic individuals, retirees and beneficiaries, now and sooner or later. Of utmost significance now’s the approval of the Plan’s utility underneath the Multiemployer Pension Reform Act.

From the start, MPS and its proxies have sought to make use of this lawsuit to attempt to block that utility from being permitted and enforce. Allow us to once more be completely clear—failure to make mandatory profit reductions would result in the insolvency of the AFM-EPF and dramatic reductions in advantages for individuals, together with those that are protected against any cuts on account of their age or incapacity underneath MPRA.

Now that the plaintiffs have didn’t show their claims concerning the Plan’s previous investments, MPS is making new claims about present investments as “overly dangerous” and a sequence of “bets.” But, MPS gives not one shred of proof to help this biased and inaccurate characterization, besides to make apples-to-oranges comparisons to different pension plans. The truth is, the pages of the brand new reviews cited by MPS explicitly warn towards such comparisons with a transparent disclaimer: “The utility of this comparative data is restricted. The funding allocation of any plan, together with AFM‐EPF, is developed based mostly on quite a lot of elements distinctive to the plan… Accordingly, this comparability, standing alone, doesn’t point out the appropriateness of any specific allocation.”

MPS and the plaintiffs have inappropriately in contrast the Plan’s efficiency to inventory market index funds, ignoring the essential causes {that a} pension plan have to be well-diversified. For instance, had the Plan shifted extra of its property into the inventory market as MPS and the plaintiffs recommend, the present market crash would have had a higher impact on our property. And, if we adopted MPS’s logic, losses throughout the 2008-2009 monetary disaster would have been a lot worse too. MPS and the plaintiffs repeatedly cherry-pick particular person information factors that serve their very own pursuits, however a complete look reveals that the Plan’s common annualized funding return stands at a really sturdy 8.9% for the reason that finish of the monetary disaster (4/1/09 by means of 3/31/19).

We won’t be bullied into making imprudent choices with Plan investments. MPS has positioned itself as naysayers whose singular purpose is undermining the Plan and your confidence within the Trustees for patently political functions. Their whole method is telling you issues they assume it would be best to hear. The purpose of the Plan’s Trustees is to inform all individuals what it’s essential to hear—in different phrases, the reality.

We’re assured that honesty will carry the day. We want all of our individuals the very best throughout this unprecedented public well being and financial disaster. These are very troublesome occasions for our nation and musicians are among the many hardest hit. We take severely our duty to guard your retirement safety and ship the information about our Pension Plan.

](https://deadline.com/2020/01/musicians-union-pension-plan-asks-treasury-department-for-permission-to-reduce-benefits-1202822935/)

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Cecilia Jones

Cecilia Jones - Cecilia Jones loves to write about movies, music, and the most popular and exciting news.

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