Showbizreporting's Blog

October 15, 2009

Required Reading

Filed under: Entertainment — showbizreporting @ 11:34 am
Tags: , , , ,

Subject: Can two unions/companies/groups, etc. merge?

This is required reading for all SAG and AFTRA members.

Why It’s Time to Retire the 401k – TIME
http://www.facebook.com/l/d5ca7;www.time.com/time/business/article/0,8599,1929119,00.html?artId=1929119?contType=article?chn=bizTech

Can two entities like SAG and AFTRA merge? Of course. Anything is possible.

Go into that merger knowing, however, that there will be tradeoffs.

It is the responsibility of SAG and AFTRA leadership to educate the membership on the potential gains as well as the potential concessions that go with any kind of merger.

This article in the latest TIME magazine is a good place to start.

Short background: SAG and AFTRA currently have Defined Benefit (DB) pension plans. A merger likely ends those plans and moves everyone not already retired to some combination of either a DB/DC plan (hybrid) or a straight DC (Defined Contribution plan–like a 401K or IRA).

This article gives us a glimpse of the possible future.

STAY INFORMED

Anthony Thomas Desantis Iii sent a message to the members of SAG USA.

——————–
Subject: Re-pasted link and a short response to a question.

Re-Pasted Link
http://www.facebook.com/l/d5ca7;www.time.com/time/business/article/0,8599,1929119,00.html?artId=1929119?contType=article?chn=bizTech

Question: Wwhy does a merger likely mean an end to DB?

My brief answer: There have been almost no new DB plans opened in the past 5 years in the entire world. When two entities like SAG and AFTRA join, they do not so much merge the plans as close the old one and start a new one. There are always exceptions to every rule but this is the prevailing practice.

Everyone will fall on a continuum at that point. On one extreme end will be people who are already retired. They will retain their promised pension rights. At the other extreme are people who will be newly joined union members. They will most likely start with some form of 401K type pension from day one. In the middle will be everyone else. The trustees will run the numbers and draw a line or two on the continuum. People who are close to retirement may retain their DB rights. But everyone on the other side of that line may retain a portion of their DB rights and then everything from the day they open the new plan will be DC into that 401K-type plan. This is a hybrid situation. People with not too many years in the old plan will likely have those rights converted into a seed amount to start their new 401K plan and then retain that plan until they retire. The article has more specifics on what that means.

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