Issue link: https://digital.copcomm.com/i/1468810
F R O M C A T H Y R E P O L A , N A T I O N A L E X E C U T I V E D I R E C T O R Know Your Plans UNDERSTANDING THE MPI PLANS IS KEY TO OUR FUTURE P H OT O : M A R T I N C O H E N I n 2018, after the stance our local took against ratification of the Basic Agree- ment, I was removed from my position as a Director on the Board of the Motion Picture Industry Pension & Health Plans. The reason given was that I did not have a full understanding of the funding struc- tures of the Plans, but I think we all know that wasn't true. Even though I am not on the Board and should be, I still will provide you with information you should all have access to so you can be prepared for the continuing funding issues the MPI Plans will be subjected to. The overall funding structure of these Plans is complex and difficult to cover in a brief column. But it's necessary for me to do my best to educate about the mechanics of the Plans; the fu- ture of our union and our membership depends on it. Here is a brief overview of the 2021 year- end financial highlights of the MPI Plans: • Residual income of $510 million exceed- ed 2020's $496 million, for a 2.8% hike. • Hours reported in 2021 were nearly 121 million. That compares to 108.5 million in 2019, which is the best comparable year because of the loss of work in 2020 due to the pandemic, which represented a 30% reduction in hours over 2019. • Active health costs (healthcare costs to active participants rather than retirees) in 2021 were $800 million, which was below our projections used for the Basic Agreement negotiations but still was almost an 11% increase. • The reserves were above 17 months in the active health plan and 10 in the retiree health plan, compared to 17.5 and 14.4 at the end of 2020. Keeping reserves up is important for several reasons, which I intend to discuss in a future column. • Year- end pension investment gross returns were 13.4% for 2021. This fluc- tuates every year based on investment income, which as you know is impossible to predict with any certainty because of fluctuations in the market. Now one might look at all this and think that everything is in good shape; those year- end numbers are positive. But they don't paint the full picture, nor does any partic- ular snapshot in time. Everything has to be considered for the long-term. We should not base assumptions on any one year, nor any individual component of funding, pension obligations, income vs. expenses, etc. Prior to any negotiations, actuaries project anticipated income to the Plans, and offset that to anticipated expenses. This helps them determine how to maintain the status quo (or relatively so) over the typical three-year term of the Basic Agreement. Income first flows into the pension plan because of legal requirements to do so. If the actuaries project a shortfall, that means the deficit will impact the health plans, and additional money must be found to cover that. That is why in 2018 and 2021 (and many previous negotiations), when we needed additional income, those projected deficits were met by increasing employer hourly health contribution rates. For the Plans, we have only three sourc- es of income - residuals, employer hourly contributions and investment income. We do have some existing new media residual obligations. It is important to remember this and disregard the misinfor- mation out there that says otherwise. We are going to continue to face increases in health care costs. There is no debate about that. This will remain a challenge in our negotiations. To reach our goal of achieving at least 80% funding of the pension, which the actuaries say will happen in 2026, we must meet our projected assumed return on investments (currently 7.25%) every year. But I also want to dispel any rumor that We need to think about long-term sustainability in our healthcare and pensions. 11 S P R I N G Q 2 I S S U E