|Variety: May 19, 2003, 10:00pm PTSAG mgmt. trustees have merger concerns. Study sez combo could result in ‘diminution of benefits’By DAVE MCNARY
Management trustees of the Screen Actors Guild’s health and pension plans have concluded the proposed combination of SAG’s plan with AFTRA’s won’t benefit thesps.
“I have concerns about any potential of SAG and AFTRA health and pension plans being in the best interests of the SAG Plans’ participants,” wrote trustee Sheldon Kasdan in a confidential memo to fellow trustees. “A merger of the health and pension plans will result in the subsidization of AFTRA participants by SAG participants.”
The previously undisclosed conclusion is at odds with a cornerstone of the current campaign to combine SAG and AFTRA into an umbrella union with affiliates for actors, broadcasters and recording artists.
Leaders of the unions asked the trustees earlier this year to start laying the groundwork to merge the health and pension plans, contending that a combined SAG-AFTRA would make it easier to subsequently merge the P&H plans and help hold down costs and improve operating efficiencies.
But the management trustees agreed with Kasdan’s conclusion, based on an unreleased feasibility study by Mercer Consulting, and found that such a move will result in a “diminution of benefits and an increase in administrative costs.”
Under pressure from SAG trustees, however, the management trustees agreed, in a motion approved by the benefits consolidation committee headed by Kasdan, to ask the SAG plan administrator to study the matter further and discuss it at its July meeting after SAG and AFTRA members have voted on the merger. The committee also voted for SAG to reimburse the plan for the costs of that study and any out-of-pocket costs.
The SAG plan operates independently of SAG with 36 trustees — 18 repping management and 18 for SAG. The plan and SAG have refused to release the 43-page Mercer report, saying it is confidential.
Kasdan, who heads the benefits consolidation committee, questioned the Mercer study’s suggestion that boosting eligibility and premiums could offset the lower employer contribution levels for AFTRA contracts. “It is hard to understand how raising the eligibility thresholds and/or participant premiums for SAG and AFTRA participants in order to accommodate a merger is in the best interests of the participants of either plan,” he added.
Kasdan also noted the Mercer report found that AFTRA’s plan will post an operating loss this year and a “significant” erosion of reserves, while SAG’s plan will generate a small operating gain this year and a “modest” increase in reserves.
“The question arises whether it is prudent for SAG trustees to be considering a merger of the SAG health plan with a health plan that is in worse financial shape than itself,” he said. “It is important to note that there is not information contained in the Mercer report which suggests that a significant savings will result from a merger to improve, or maintain status quo benefits for SAG (or even AFTRA) participants.”
Kasdan also said the Mercer study suggested the only opportunities for savings would come from changing its systems for health plan providers, drugs and vendors. “However, the plans do not have to merge in order for the SAG and AFTRA plans to enter into any of these arrangements, so they should not be considered by the trustees as a reason to merge,” he added.
Due to soaring costs, SAG’s plan cut benefits and instituted its first premium for members this year, resulting in 30% of the 30,000 eligible participants declining coverage. AFTRA’s plan, which covers about 18,000 participants, will impose its first premium in July and tighten benefits.
Kasdan also took issue with the Mercer report’s recommendation of a single pension plan, saying, “It does not appear that one plan may be practical or beneficial to participants.” He cited concerns over the disparity between SAG’s funding standard account credit balance of $290 million compared to AFTRA’s $8 million level; SAG’s costs matching expected contributions to funding benefits while AFTRA’s costs are double; and AFTRA’s plan being less funded on a withdrawal liability basis.
Combo is best
But the SAG-AFTRA Partnership for Power campaign has contended that combining SAG with AFTRA is the “best chance” to create a single health and pension plan. “Consolidation of the benefits plans would mean less money spent on administration and more money for benefits,” the campaign asserts.
SAG trustee Daryl Anderson, appearing at a news conference at Guild headquarters to promote the “consolidation” Monday, characterized the Mercer report as a “working” and “starting point” document, when asked why it has not been released to members, but added that his obligations as a trustee precluded him from commenting further.
SAG trustee Kitty Swink, appearing at the same event, also refused to comment on specifics, adding, “No trustee would, for any reason, put together a plan that would hurt participants.”
Anderson, Swink and SAG board member Mitch Ryan all noted they had been against the 1998 merger and stressed that the proposed combo of unions is far better than the merger proposed five years ago, which received backing from only 46% of SAG voters.
One key reason they cited is the growth of TV shows shot on digital, noting performers generally received the lower AFTRA rates during the recent TV pilot season due to the uncertainty over which union has jurisdiction (SAG covers film; AFTRA covers tape).
“The opponents to this deal say there are alternatives, but they under-estimate the complexity of doing that,” Anderson said. “I don’t want to see us wait 12 years to solve the digital problem.”
Ballots go out June 9; at least 60% of voters in both unions must approve the merger.