Exhibit 7.08 

Annual Return Excerpts

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AU I A A 
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Exhibit 7.09 

Rehabilitation Plan and Updates

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actuarial assumptions and upon exhaustion of all reasonable measures, the plan cannot reasonably be 

expected to emerge from critical status by the end of the 10-year rehabilitation period.2

After extensive deliberations and consultations with Milliman and Plan legal counsel, as well as an indepth review of a variety of possible alternatives, the Board of Trustees of the Plan (the “Board”) 

concluded that, based on reasonable actuarial assumptions and upon exhaustion of all reasonable 

measures, the Plan cannot reasonably be expected to emerge from critical status by the end of a 10-

year rehabilitation period. Further information regarding that conclusion is described in greater detail 

below. 

Accordingly, the Board adopted its initial rehabilitation plan (the “Rehabilitation Plan”) on April 15, 

2010 as the best long-term option for improving the funded status of the Plan and determined that it is 

in the best interest of the Plan and its participants and beneficiaries. The Rehabilitation Plan consists 

of a single schedule, known as the “default schedule” required by the PPA. The Rehabilitation Plan 

originally employed reasonable measures to enable the Plan to emerge from critical status at a later 

date than the 10-year rehabilitation period. As the Plan is currently not projected to emerge from 

critical status, the Rehabilitation Plan now employs reasonable measures to enable the Plan to forestall 

insolvency. 

III. OVERVIEW OF REHABILITATION PLAN

The Rehabilitation Plan consists of a single schedule that sets forth both benefit modifications and the 

employer contribution requirements. Under the PPA, the collective bargaining parties are responsible 

for adopting a contribution schedule consistent with the Rehabilitation Plan. 

The main elements of the Rehabilitation Plan are as follows: 

1. In addition to the reduction in the Plan’s “Benefit Multiplier” that was effective January 

1, 2010, the Rehabilitation Plan eliminates the following benefits and benefit 

alternatives previously available under the Plan: (i) early retirement subsidies; 

(ii) benefit guarantees for the single life annuity; (iii) “pop-up” and benefit guarantee 

features of the 50% joint and survivor annuity; (iv) post-normal retirement age 

subsidies; (v) certain forms of benefit for merged plans; and (vi) the lump sum form of 

benefit offered by the Plan (not including lump sums with an actuarial present value of 

$5,000 or less.). These changes, which generally became effective as of June 1, 2010, 

are described in more detail in Section V below. 

2. The Rehabilitation Plan requires additional employer contributions to the Plan. 

Additional employer contributions are necessary to enable the Plan to forestall 

insolvency after future benefit accruals and other benefits have been reduced to the 

maximum extent permitted by law. The employer contribution requirements are 

described in more detail in Section VI below. 

 

2 The 10-year rehabilitation period begins with the first plan year that begins two years after adoption of the 

rehabilitation plan or, if earlier, the first plan year after expiration of collective bargaining agreements (in effect 

when the actuarial certification for the first critical year was due) covering at least 75% of the plan’s active 

participants, although the rehabilitation plan may be effective before the 10-year rehabilitation period begins. In 

the case of the Plan, the 10-year rehabilitation period begins April 1, 2013. 

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IV. EXTENSION OF AMORTIZATION

The original Rehabilitation Plan also provided that the Board would seek approval from the Internal 

Revenue Service (the “IRS”) for the Plan to obtain a 5-year extension of the period for amortizing 

unfunded liabilities of the Plan pursuant to Section 431(d) of the Code and Section 304(d) of ERISA. 

However, the Rehabilitation Plan was subsequently updated to remove this provision because the 

Trustees instead elected to apply funding relief under the Pension Relief Act of 2010. 

V. BENEFIT MODIFICATIONS

A. Change in Future Benefit Accruals 

The monthly pension benefit payable to participants in the form of a single life annuity 

generally is computed by multiplying each $100 of employer contributions earned by a 

participant by a specified dollar amount (the “Benefit Multiplier”). In anticipation of the need 

to develop a Rehabilitation Plan, the Board decided in October 2009 to reduce the Benefit 

Multiplier for benefits earned under the Plan on and after January 1, 2010 from $2.00 to $1.00 

for benefits beginning at age 65. Corresponding revisions were made to the Benefit Multiplier 

for benefits commencing between the ages of 55 and 64. 

While it is not technically part of the Rehabilitation Plan, the $1.00 Benefit Multiplier was 

adopted in anticipation of the Plan entering critical status. The $1.00 Benefit Multiplier is the 

equivalent of a 1% monthly benefit accrual, which is the minimum rate permitted by a default 

schedule under the PPA. The Board considered the possibility of adopting an alternative 

schedule reducing the Benefit Multiplier below $1.00 in order to enable the Plan to emerge 

from critical status more rapidly. However, after lengthy deliberations, the Board ultimately 

concluded that the same likely effects of reducing the Benefit Multiplier to $1.00 that had made 

that decision so difficult – primarily, the wholly inadequate retirement benefits resulting from 

the reduction, and the consequent incentive for bargaining parties to withdraw from the plan 

and turn to alternative retirement vehicles that provide greater benefits for their contribution 

dollars – were of even greater concern when considering an even further reduction. These 

concerns were exacerbated by the fact that an alternative schedule would be extremely costly, if 

not impossible, to administer, given the large number of employers contributing to the Plan and 

the freelance nature of much of the covered employment.

Since the original Rehabilitation Plan was adopted, the Board and a special committee of the 

Board have attempted to develop other workable benefit structures that might improve the 

financial status of the Plan. Thus far, no structure has been identified that the Trustees consider 

reasonable and consistent with the applicable legal requirements. The Trustees are particularly 

concerned that further benefit reductions would undermine participant and employer support of 

the Plan. 

B. Description of Additional Benefit Modifications

The Rehabilitation Plan requires the additional modifications set forth below effective for 

pension benefit payments with a pension effective date on or after June 1, 2010, including 

participants with respect to whom contributions were not required to be made as of April 15, 

2010. However, these benefit reductions did not apply to pension benefit payments with a 

pension effective date of June 1, 2010 if the initial application for benefits was postmarked (or 

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2. Elimination of the Benefit Guarantee for Single Life Annuity

For pension benefits payable in the form of a single life annuity, there was previously a 

guaranteed payment of 100 times the portion of the monthly pension benefit as of the 

participant’s pension effective date for accruals earned prior to 2004. Under the 

guarantee, if a participant died before receiving a total of 100 times the portion of the 

monthly benefit earned prior to 2004, the designated beneficiary received the balance of 

that amount. The Rehabilitation Plan eliminated the guaranteed payment. Thus, the 

single life annuity under the Rehabilitation Plan provides for monthly payments for the 

life of the retired participant and ceases at the participant’s death.

3. Elimination of the “Pop-Up” Feature of the 50% Joint and Survivor Annuity 

For pension benefits payable in the form of a 50% joint and survivor annuity, if the joint 

annuitant dies before the participant, and within five years of the participant’s pension 

effective date, the portion of the benefit earned prior to 2004 previously increased to 

what it would have been if the participant had elected a single life annuity form of 

benefit. The Rehabilitation Plan eliminated this “pop-up” feature. Accordingly, the 

death of the joint annuitant after the pension effective date no longer has any effect on 

the participant’s monthly benefit. 

4. Elimination of the Benefit Guarantee for 50% Joint and Survivor Annuity 

For pension benefits payable in the form of a 50% joint and survivor annuity, if the 

participant and joint annuitant both die within five years of the participant’s pension 

effective date, the Plan previously paid the participant’s beneficiary the balance of the 

five years of monthly benefit payments on the portion of the benefit earned by the 

participant prior to 2004. The Rehabilitation Plan eliminated this payment guarantee. 

Accordingly, there are no longer any continuing payments after the death of the retired 

participant and his or her joint annuitant. 

5. Elimination of the Post-Normal Retirement Age Subsidy

For participants who begin to receive their pension benefit after normal retirement age 

(generally age 65), the Plan previously paid the amount payable at normal retirement 

age, increased to account for the late commencement using simplified factors. This 

resulted in a benefit that was greater than if it were computed using actuarial equivalent 

factors. Under the Rehabilitation Plan, the benefit payable after normal retirement age 

is increased using the interest and mortality assumptions that achieve actuarial 

equivalence.

6. Elimination of Merged Plan Forms of Benefit 

Under the Rehabilitation Plan, benefits earned by individuals who participated in either 

the AFM Retirement Plan or the AFM-EPF Staff Retirement Plan prior to merger with 

the Plan are paid to these individuals only in the same benefit forms that are generally 

available with respect to benefits under the Plan.

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7. Elimination of Lump-Sum Form of Payment for Retirement Account Benefit

The Plan previously permitted participants to receive a lump-sum payment of the 

amounts attributable to contributions earned before 1968, plus interest (also known as 

the Retirement Account Benefit). This form of payment was eliminated under the 

Rehabilitation Plan.3

VI. EMPLOYER CONTRIBUTION INCREASES

A. Employer Contribution Increases Required under the Rehabilitation Plan

The Rehabilitation Plan requires contributing employers to increase the amount of 

contributions made to the Plan, except for contributions that are not taken into account in 

determining any benefit payable under the Plan. As described in Section VII below, if the 

bargaining parties did not agree to the increased contributions in this Rehabilitation Plan by 

June 1, 2010, the employer is subject to a surcharge required by law that is greater than the 

contribution increases. 

The required increase in the employer contributions is as follows: 

1. Effective for contributions earned on or after June 1, 2010 but before April 1, 

2011, the contribution rate is 104% of the contribution rate otherwise in effect 

under the collective bargaining agreement or expired collective bargaining 

agreement.4

2. Effective for contributions earned on or after April 1, 2011 and thereafter, the 

contribution rate is 109% of the contribution rate otherwise in effect under the 

collective bargaining agreement or expired collective bargaining agreement 

(excluding the 4% increase, which is not cumulative). 

3. To the extent an employer’s contributions are calculated as set forth in the 

arbitration award of Burton Turkus (the “Turkus Award”): 

a. the 104% and 109% required contribution amounts set forth in 

paragraphs 1. and 2. are based on 100% of the contributions calculated as 

set forth in the Turkus Award (or, if greater, 100% of the minimum 

contribution rate set forth in the employer’s collective bargaining 

agreement) plus an additional 4% or 9% (as applicable) of the minimum 

contribution rate set forth in the employer’s collective bargaining 

agreement. 

b. However, if the employer had a complete or partial withdrawal from the 

Plan, or is otherwise terminated as a contributing employer by the Board, 

 

3

 The Plan does not provide for any other lump-sum benefits other than those benefits with an actuarial present 

value of $5,000 or less.

4

 Contributions are considered earned in accordance with the normal Plan procedures for crediting contributions. 

For live work, it is generally the date of the performance.

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on or before March 31, 2015, the employer must pay, within ten business 

days of the date on which the Plan sends the employer a written invoice, 

contributions (retroactive to June 1, 2010) calculated based on 104% or 

109% (as applicable) of the contributions calculated as set forth in the 

Turkus Award (or, if greater, 100% of the minimum contribution rate set 

forth in the employer’s collective bargaining agreement), less any 

additional contributions already paid under subparagraph (a) above, plus 

interest calculated at an annual rate of 8%. 

4. In the case of single engagement agreements, the contribution rate otherwise in 

effect under the collective bargaining agreement shall be deemed to be a rate 

that is no less than the average of the contribution rates in all of the agreements 

submitted to the Plan by the employer (or by the bandleader, if the bandleader is 

the payor) during calendar year 2009, where the employer or bandleader 

submitted five or more single engagement agreements during calendar year 

2009. 

5. Effective in the sixth year of any collective bargaining agreement entered into 

on or after May 1, 2010 that establishes pension contributions for a term of more 

than five years (including extensions), the contribution rate will increase an 

additional 25% above the contribution rate otherwise applicable to those 

contributions (and the portion of the increase above 9% will not generate benefit 

accruals).

The increased contributions are generally treated the same as all other employer contributions, 

so they are payable on the same schedule as the contributions on which the increase is based 

and will generate benefit accruals for participants (except as noted in paragraph 5. above). 

B. Effective Date of Contribution Increases

Unless otherwise specifically provided herein, the contribution increases required by the 

Rehabilitation Plan become effective upon the earlier of: 

1. the effective date of a collective bargaining agreement (or an amendment to that 

collective bargaining agreement) that adopts a contribution schedule that 

contains terms consistent with the Rehabilitation Plan contribution schedule, or 

2. 180 days after the expiration date of a collective bargaining agreement providing 

for contributions to the Plan that was in effect on April 1, 2010, if by such date 

the bargaining parties have failed to adopt a contribution schedule that contains 

terms consistent with the contribution schedule set forth in this Rehabilitation 

Plan.

If the collective bargaining agreement had an expiration date before April 1, 2010 and no 

successor agreement was yet in effect on that date, the contribution schedule must have been 

adopted by September 28, 2010 (180 days from April 1, 2010). 

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C. No Decrease Permitted in Employer Contributions Otherwise Required

The Board previously announced that the contribution rates in any collective bargaining 

agreement may not be decreased.

5

 Accordingly, the contribution rate in a collective bargaining 

agreement may not be decreased to avoid application of the contribution rate increase under the 

Rehabilitation Plan. 

VII. EMPLOYER SURCHARGES

The PPA requires that mandatory “surcharges” be imposed on every contributing employer beginning 

30 days after the date on which the PPA-required notice of critical status is provided to the employer – 

in this case, surcharges began June 1, 2010 – and continuing until the employer’s collective bargaining 

agreement(s) (or other agreement(s) pursuant to which it is contributing) is amended to incorporate a 

contribution schedule that contains terms consistent with the Rehabilitation Plan. 

The amount of the surcharge is as follows: 

1. Effective for contributions earned on or after June 1, 2010 and before April 1, 2011, the 

surcharge was 5% of the employer’s contributions to the Plan; and 

2. Effective for contributions earned on or after April 1, 2011, the surcharge is 10% of the 

employer’s contributions to the Plan. The 10% surcharge remains in effect for each 

plan year in which the Plan remains in critical status. 

The surcharge is due and payable on the same schedule as the contributions on which the surcharges 

are based. Surcharges are over and above the required employer contributions and, consistent with 

law, will not generate any benefit accruals for participants. 

Where the bargaining parties failed to adopt the contribution schedule in the Rehabilitation Plan by 

June 1, 2010, the employer remains subject to all surcharges imposed under the PPA until such time as 

the bargaining parties adopt provisions (or, if later, such time as those provisions take effect) in the 

employer’s collective bargaining agreement that contain terms consistent with the Rehabilitation Plan 

schedule. No retroactive amendments are permitted. If there is an unreasonable delay in providing the 

Fund Office with an executed agreement that contains terms consistent with the Rehabilitation Plan 

schedule, the adoption date will be treated as the date of receipt by the Fund Office and the surcharge 

will be imposed through that date. 

The law provides that employers on whom the Rehabilitation Plan contribution schedule is imposed 

(e.g., because the bargaining parties have not adopted the Rehabilitation Plan contribution schedule 

 

5

 Specifically, an employer and a collective bargaining agreement is not acceptable to the Board in the event that: (i) 

in the case of a collective bargaining agreement the terms of which were in effect (by agreement or operation of 

law) on October 15, 2009, the effective contribution rate applicable to any period of that collective bargaining 

agreement is reduced (by agreement or otherwise on or after October 16, 2009); or (ii) in the case of any future 

extension of or successor to any collective bargaining agreement the terms of which were in effect (by agreement 

or operation of law) on October 15, 2009, the effective contribution rate is reduced to a rate that is lower than the 

effective contribution rate in effect on the last day of the expiring collective bargaining agreement (based on the 

terms of the collective bargaining agreement as they existed on October 15, 2009).

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within 180 days after expiration of the collective bargaining agreement) will remain subject to the 

surcharges imposed under the PPA until such time as the collective bargaining parties adopt provisions 

in their collective bargaining agreements that contain terms consistent with the Rehabilitation Plan 

schedule. Thus, under the law, such employers would be subject to both the Rehabilitation Plan 

contribution schedule and the surcharge. 

VIII. REHABILITATION PLAN OBJECTIVES

The original Rehabilitation Plan consisted of reasonable measures adopted by the Board which, based 

on reasonable actuarial assumptions, were expected to enable the Plan to emerge from critical status at 

a later time than the end of the 10-year rehabilitation period. At the time the Rehabilitation Plan was 

adopted by the Board, the Plan was estimated to emerge from critical status no later than March 31, 

2047. 

Currently, Milliman does not project that the Plan will emerge from critical status. Accordingly, the 

objective of the Rehabilitation Plan is to take reasonable measures to forestall possible insolvency. 

These projections were based on the Plan’s actuarial assumptions, including achieving the 7.5% annual 

investment return assumption and, as required by law, do not take into account the possibility of 

investment returns achieved by the Plan in excess of that amount. Whether the Plan will continue to 

remain solvent over the long term depends most on its investment performance over time and also on 

the total amount of contributions made to the Plan. 

IX. ALTERNATIVES CONSIDERED BY THE BOARD

At the time it adopted the Rehabilitation Plan, the Board devoted a considerable amount of time and 

attention to considering the advantages and disadvantages of the alternatives that would enable the 

Plan to emerge from critical status by the end of the 10-year rehabilitation period. Some of the 

alternatives that were considered by the Board would have required at least 58% increases in employer 

contribution rates to emerge from critical status by the end of the 10-year rehabilitation period (even 

without corresponding increases in benefit accruals and with the benefit reductions described in 

Section V above).6 The contributions that would be required to meet this goal are far higher now. 

After considering these alternatives when designing the Rehabilitation Plan, the Board concluded that 

each would be unreasonable and would involve considerable risk to the long-term health (and even 

viability) of the Plan. In that regard, the original Rehabilitation Plan stated the following:

“In reaching this conclusion, the Board took into account various considerations, including the 

following: 

1. The near-impossibility of emerging from critical status at the end of the 10-year 

rehabilitation period in view of the significant investment losses suffered by the Plan 

over the two plan years ended on March 31, 2009. The collapse of the financial 

markets in 2008 resulted in the Plan’s experiencing the worst investment losses in its 

 

6

 Specifically, the Board considered that a 58% contribution rate increase (or 91%, if the increase generated a 

benefit accrual) would have been required if the same benefit changes described in Section V, above, were 

adopted. In addition, the Board considered that the contribution rate increase would need to be 76.75% (120.5% if 

benefit accrual generating) if the benefit changes were not adopted.

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50-year history over these two plan years. As compared to the asset level that was 

projected by Milliman over this period based on the Plan’s assumed investment return 

of 7.5%, the Plan’s assets declined by 40% or nearly $900 million. As a result of this 

decline in value, the Plan’s funded percentage (using the fair market value of assets), 

which was 108.5% as of April 1, 2007, declined to 62.6% as of April 1, 2009 and then 

increased to 72.8% as of April 1, 2010. 

2. The impact of the severe economic decline in 2008 and 2009 on the music industry. 

Overall, employer contributions to the Plan during 2009 declined by 7% from the 

previous year. Many of the contributing employers to the Plan are small organizations 

that do not have the financial resources to withstand the economic downturn. Of 

course, they are not alone. Larger contributors are also undergoing considerable 

economic stress as a result of the severe recession. As simply one example of the 

unprecedented problems afflicting the live music industry, many symphony orchestras, 

which together make up more than 40 percent of annual Plan contributions, are in 

significant financial distress.7 The recorded music industry is in substantial economic 

distress as well. Sales of recorded music have been declining substantially for the past 

decade and all of the major record companies that contribute to the Plan have 

experienced large-scale layoffs; this downward trend is expected to continue by all 

accounts for the foreseeable future. The theatrical motion picture and television 

industries have also experienced significant restructuring and layoffs as a result of the 

economic downturn. On Broadway, producers have been under increased pressure to 

keep capitalization costs down, resulting in fewer musicals with smaller orchestras. 

3. Even if certain contributing employers could financially withstand the enormous 

contribution increases under the alternative schedules described above, the Board 

believes that neither the participants nor contributing employers would find continuing 

value in participating at those rates in a retirement plan that has reduced accrual rates 

and eliminated adjustable benefits to the maximum extent permitted under the law.8 

4. In addition, the magnitude of the employer contribution increases required by the 

alternative schedules would likely have resulted in lower negotiated wages for 

participants and/or decreased employer contributions to other benefit plans covering 

these participants (such as the plan providing their health benefit coverage). If 

participants perceive a significant decrease in value in their total overall compensation 

– including wages, pension benefits and health benefits – the Board concluded that they 

would be likely to encourage their employers to withdraw from the Plan. Thus, the 

 

7

 All orchestras are non-profit organizations and most depend on donations and endowment income for the majority 

of their income. These particular revenue sources have declined significantly as a result of the recent economic 

crisis. Many orchestras have been driven close to bankruptcy and some have gone out of business altogether. 

Most, including some of the nation’s oldest and most prominent symphony orchestras, are negotiating wage 

freezes and wage reductions. 

8

 As merely one example, the Board concluded that it was unlikely that contributing employers will pay the required 

contribution increases to maintain the current plan of benefits under one of the alternative schedules considered by 

the Board. As employers’ contribution payments are increased to levels that exceed their annual withdrawal 

liability payment amounts, the Board is concerned that employers would respond by completely and/or partially 

withdrawing from the Plan.

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Board concluded that a further reduction in benefits would be inconsistent with the goal 

of presenting a viable plan with ongoing value to active participants. Such action could 

also lead to increased employer withdrawals or reductions in contributions, as the 

collective bargaining parties would see less benefit to ongoing participation. 

5. The Plan is maintained pursuant to thousands of collective bargaining agreements 

negotiated by the American Federation of Musicians of the United States and Canada 

(the “AFM”) or one of the AFM’s 145 local unions. The AFM does not have the ability 

to require its local unions to make ongoing participation in the Plan a core principle in 

contract negotiations. 

6. The Board also considered other methods of calculating the Plan’s liabilities. The 

implementation of one such method, known as the “shortfall method” of amortizing the 

liabilities of the Plan, could have the effect of causing the Plan not to be in critical 

status for the plan year beginning April 1, 2010. However, the Board concluded that 

entering critical status was inevitable and implementing this actuarial technique would 

only require even more severe benefit and contribution modifications in the future to 

protect the Plan’s long-term viability.

7. The Board also considered eliminating early retirement benefits entirely (such that 

participants would not be permitted to receive retirement benefits prior to age 65, even 

on an actuarially equivalent basis) and eliminating pre-retirement death benefits for 

non-spousal beneficiaries. However, the Board chose not to do so due to (i) the Plan 

actuary’s conclusion that the actuarial impact of eliminating these benefits would be de 

minimis and (ii) the administrative costs associated with these changes.” 

Each year since the adoption of the Rehabilitation Plan, the Board and a special committee of the 

Board have continued to assess the Plan’s funded status and have confirmed the original conclusion 

about the alternatives considered. Based on its experience in the industry and in negotiating collective 

bargaining agreements that include contribution obligations to the Plan, regardless of the employer size 

and financial strength, contribution rates and benefits are such that a further increase in contributions 

or reduction in benefits would create an unreasonable risk that contributing employers would seek to 

negotiate withdrawals from the Plan at a substantially increased rate, and that an increased number of 

bargaining units would cease their efforts to negotiate agreements requiring contributions to the Plan. 

The Board therefore concluded that requiring annual contribution increases above the level currently 

required or reducing benefits below the level currently provided would not be reasonable and would 

accelerate a possible insolvency of the Plan, rather than forestall it. 

X. DELINQUENT EMPLOYER CONTRIBUTIONS/WITHDRAWAL FROM THE PLAN

A contributing employer’s failure to contribute to the Plan timely at the rates required by the 

Rehabilitation Plan schedule (once agreed to or imposed) will result in the deficient amounts being 

treated as delinquent employer contributions under the Plan. In addition, the contributing employer 

will be subject to excise taxes (equal to 100% of the unpaid contributions) as provided under the PPA. 

Additionally, this may result in a determination by the Board that the employer has failed to maintain 

(and thus has withdrawn from) the Plan, in which case such employer will then be subject to 

withdrawal liability under the terms of the Plan and Title IV of ERISA. Further, under the PPA, any 

failure to make a surcharge payment will also be treated as a delinquent contribution.

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XI. NOTICE GIVEN BEFORE BENEFIT REDUCTIONS BECOME EFFECTIVE

Pursuant to Section 432(e)(8)(C) of the Code, notice was given at least 30 days before the general 

effective date of the reduction in adjustable benefits under the Plan. 

XII. NON-COLLECTIVELY BARGAINED PARTICIPANTS

In the case of an employer that contributes to the Plan on behalf of both collectively bargained and

non-collectively bargained participants, the contributions for, and the benefits provided to, the noncollectively bargained employees, including surcharges on those contributions, were determined as if 

those non-collectively bargained participants were covered under such employer’s first-to-expire 

collective bargaining agreement that was in effect on April 1, 2010. 

In the case of an employer that contributes to the Plan on behalf of non-collectively bargained 

employees only, the rules contained in this Rehabilitation Plan shall be applied as if the employer were 

the bargaining party, and its participation agreement (or other operative agreement) were a collective 

bargaining agreement with a term ending on the first day of the plan year beginning after the employer 

is provided with the Rehabilitation Plan (i.e., generally April 1, 2011). 

XIII. APPLICATION OF REHABILITATION PLAN TO FUTURE AGREEMENTS

If a collective bargaining agreement providing for contributions to the Plan in accordance with the 

Rehabilitation Plan schedule expires while the Plan is still in critical status and the bargaining parties 

to the agreement fail to adopt a contribution schedule with terms consistent with the updated 

Rehabilitation Plan and its contribution schedules, then the contribution schedule under the expired 

collective bargaining agreement (as updated and in effect on the date the collective bargaining 

agreement expires) is implemented 180 days after the date on which the collective bargaining 

agreement expires. 

XIV. REHABILITATION PLAN STANDARDS

The PPA requires that a plan set forth annual standards for meeting the requirements of its 

rehabilitation plan. However, the PPA does not define the standards applicable to a rehabilitation plan, 

such as this Rehabilitation Plan, that is not designed to emerge from critical status at the end of the 10-

year rehabilitation period. 

Based on reasonable assumptions, Milliman currently projects that, if the Plan meets its current 

assumptions, the Plan will remain solvent over Milliman’s 20-year projection period. Longer-term 

projections show that insolvency may occur after that 20-year period, but Milliman has advised that 

projections that far into the future are less likely to be accurate. 

Accordingly, this projection will change over time, as the Plan’s actual experience differs from the 

assumptions that were made to develop the projection. The Board recognizes the possibility that the 

Plan’s actual experience could be more or less favorable than the assumptions used as the basis for 

developing the Rehabilitation Plan. The Board also recognizes the need to review and update the 

Rehabilitation Plan on an annual basis. Consequently, the Board will rely on an annual updated 

assessment regarding this projection as the basis for evaluating the Plan’s progress under this 

Rehabilitation Plan, and the annual standard for meeting the requirements of the Rehabilitation Plan 

will be a demonstration, based on the updated actuarial projections each year using reasonable 

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assumptions, that the Rehabilitation Plan (as amended from time to time and as then currently in 

effect) will forestall insolvency until at least the end of the 10-year rehabilitation period. 

XV. ANNUAL REVIEW AND UPDATE OF REHABILITATION PLAN

Milliman will annually report to the Board regarding the Plan’s progress in meeting this annual 

standard. The Board may make any changes to this Rehabilitation Plan that it deems necessary or 

advisable. 

XVI. CONSTRUCTION AND MODIFICATIONS TO THIS REHABILITATION PLAN

This Rehabilitation Plan is intended to present only a summary of the law, the Plan and the changes to 

the Plan. It is not intended to serve as an exhaustive, complete description of the law, the Plan or the 

modifications discussed herein.9 

The Board reserves the right, in its sole and absolute discretion, to construe, interpret and/or apply the 

terms and provisions of this Rehabilitation Plan in a manner that is consistent with the PPA and other 

applicable law. Any and all constructions, interpretations and/or applications of the Plan (and other 

Plan documents) or the Rehabilitation Plan by the Board, in its sole and absolute discretion, shall be 

final and binding on all parties affected thereby. Subject to the PPA and other applicable law, and 

notwithstanding anything herein to the contrary, the Board further reserves the right to make any 

modifications to this Rehabilitation Plan that they, in their sole and absolute discretion, determine are 

necessary and/or appropriate (including, without limitation in the event of any omission or the issuance 

of any future legislative, regulatory or judicial guidance). 

 

9

 The terms of the official plan documents will govern in the event of any contradiction between this notice and the 

Plan documents as adopted to incorporate the changes to the Plan described herein. 

www.afm-epf.org AFMEPF1415 07-01-20 6
AMERICAN FEDERATION OF MUSICIANS AND EMPLOYERS’ PENSION PLAN

UPDATE TO REHABILITATION PLAN

June 2018

The Rehabilitation Plan contribution schedule has been updated to require a 10% increase in the rate of 

contributions to the American Federation of Musicians and Employers’ Pension Plan (the “Fund”), as 

described in greater detail below. This increase is in addition to the 9% additional contribution previously 

required by the original 2010 Rehabilitation Plan. This means for all successor collective bargaining 

agreements, the contribution rate for contributions made on scale wages must increase by 10%, to 110% 

of the current contribution rate.

1. Required effective date of change

This increase must be included in the successor to any collective bargaining agreement (or extension of 

that collective bargaining) that expires on or after August 1, 2018. 

This increase must be effective on the effective date of the successor agreement (but no later than the 

Automatic Effective Date described below).

Example: A collective bargaining agreement expires on December 31, 2018. On April 1, 2019, 

the bargaining parties agree to an agreement with a retroactive general effective date of January 1, 

2019. The effective date of the increase must be no later than January 1, 2019.

Example: A collective bargaining agreement expires on December 31, 2018. On April 1, 2019, 

the bargaining parties agree to an agreement with an effective date of April 1, 2019. The 

effective date of the increase must be no later than April 1, 2019.

Treatment of Extensions

Any extension agreed to on or after August 1, 2018 will be disregarded in determining the expiration date 

of a collective bargaining agreement in effect on July 31, 2018 for purposes of the required contribution 

increase. 

Example: On July 31, 2018, a collective bargaining agreement provides that it expires on 

September 30, 2018. On August 1, 2018, the bargaining parties agree to extend the collective 

bargaining agreement’s term through October 31, 2019. Because the extension was agreed to on 

or after August 1, 2018, the collective bargaining agreement is treated as expired on September 

30, 2018 for the purposes of the requirement to increase the contribution rate.

If an expired collective bargaining agreement was extended prior to August 1, 2018 and the extension 

expires by its terms on a specific calendar date on or after August 1, 2018, the contribution increase will 

not be required until the extension expires (or, if earlier, the effective date of the successor agreement). 

Bargaining parties must submit to the Fund Office by August 15, 2018 documentation evidencing 

the existing extension. 

If an expired collective bargaining agreement was extended prior to August 1, 2018 but the extension 

does not expire by its terms on a specific calendar date (for example, it extends until a new collective 

AFMEPF1416
2

bargaining agreement is reached), the agreement will be deemed to have expired on August 1, 2018 for 

the purposes of the required increase.

Agreements Without Specific Expiration Dates

If a collective bargaining agreement or extension in effect on July 31, 2018 does not expire on a specific 

calendar date, it will be deemed to have expired on August 1, 2018 for the purposes of the required 

increase.

If a collective bargaining agreement, by its terms, automatically renews for an additional term absent 

notice to the contrary, it will be deemed to have expired the day before the next automatic renewal date

for the purposes of the required increase. 

Already Expired Agreements

If a collective bargaining agreement or extension expired prior to August 1, 2018 but a successor 

agreement or extension has not been agreed to prior to August 1, 2018, the collective bargaining 

agreement or extension will be deemed to have expired on August 1, 2018 for the purposes of the 

required increase.

Contributions for Non-Collectively Bargained Employees

In the case of an employer that contributes to the Fund on behalf of non-collectively bargained employees 

in accordance with a participation or other agreement with the Fund, the contribution increase will be 

required immediately following the expiration of the participation agreement in effect on July 31, 2018. 

New Use/Reuse of Media Content

In the case of a new use or reuse of media content for which the contribution rate remains governed by an 

expired collective bargaining agreement, the contribution increase will take effect on February 1, 2019.

Contracts Agreed to Prior to July 1, 2018 Subject to Ratification

If the bargaining parties of an agreement that expires on or after August 1, 2018 have agreed to the terms 

of a successor agreement prior to July 1, 2018, but the successor agreement is still subject to ratification,

then the successor agreement will not be subject to the 10% increase as long as it is ratified prior to 

September 1, 2018. The 10% increase will instead apply to the next successor or extension after that one.

Bargaining parties must submit to the Fund Office by August 15, 2018 documentation evidencing 

the bargaining parties’ agreement and the scheduled date for ratification. 

2. Automatic Effective Date

The required increase will automatically take effect on the date that is 180 days after the expiration or 

deemed expiration of the collective bargaining agreement or extension, if the bargaining parties (or the 

parties to the participation agreement, in the case of non-collectively bargained employees) have not 

agreed to the required increase by that date.

AFMEPF1417
3

3. Amount of increase

The increase is a 10% increase in the contribution rate in effect when the collective bargaining agreement

expires, including any previous negotiated increases (including previous increases required by the 

Rehabilitation Plan). The final rate derived is rounded to the nearest hundredth of one percent.

Example: If an expiring collective bargaining agreement provides for an 8.72% contribution rate 

(8.0% being the original contribution rate and 0.72% being the 9% increase previously required 

by the Rehabilitation Plan), the successor agreement must contain a rate of at least 9.59% (8.72% 

x 110%).

The increase in contribution rate required by this Update applies to contributions based on scale wages. It 

does not apply to contributions that are not based on scale wages or do not result in increased benefits 

under the Fund’s plan of benefits. 

Turkus Award 

To the extent an employer’s contributions are calculated as set forth in the arbitration award of Burton 

Turkus (the “Turkus Award”), the required contribution amount will be (i) 100% of the contributions 

calculated as set forth in the Turkus Award (but no less than 100% of the minimum contribution rate set 

forth in the employer’s collective bargaining agreement) plus (ii) 19.9% of the minimum contribution rate 

set forth in the employer’s collective bargaining agreement (which represents the cumulative 9% and 10% 

increases on the minimum).

Single Engagements

For employers or bandleaders (if the bandleader is the payor) who have in the past submitted one or more

single engagement agreements, the contribution rate in any new single engagement agreement must be at 

least 10% higher than the rate specified in the wage scale book for the applicable Local Union or, if none, 

in the last single engagement agreement submitted for the period prior to August 1, 2018.

4. Effect on Benefits

Amounts paid to the Fund as a result of the 10% increase in the contribution rate will be used solely to 

improve the financial health of the Fund. Those amounts will not be considered when calculating a 

pension benefit and therefore will not increase future benefit payments to participants.

Example: Assume a participant has scale wages of $5,000, the expiring collective bargaining 

agreement provides for an 8.72% contribution rate (8.0% being the original contribution rate and 

0.72% being the 9% increase previously required by the Rehabilitation Plan), and the new 

successor agreement contains a rate of 9.59% (8.72% x 110%). In that case, the employer will 

pay contributions of $479.50 ($5,000 x 9.59%), but the participant’s benefit amount earned in the

year of the successor agreement will be based on contributions of $436.00 ($5,000 x 8.72%).

5. New Employers

A new contributing employer to the Fund under a new collective bargaining agreement will be required to 

pay the contribution rate set forth in the new collective bargaining agreement. However, 9.09%1 of the 

 

1 The June 22, 2018 version of this Update rounded this percentage to 9.1%. This is the precise number. 

AFMEPF1418
4

contribution rate (which is equivalent to the 10% increase for existing employers) will not be considered 

when calculating a pension benefit and therefore will not increase benefit payments to participants. As 

described below, it will also generally be disregarded in determining the amount of, and payment 

schedule for, withdrawal liability.

If a new contributing employer to the Fund becomes obligated under an existing collective bargaining 

agreement for which the 10% increase is effective, the employer will be required to pay the full 

contribution rate (including the portion representing the 10% increase) in the collective bargaining 

agreement. The portion of the contributions representing the 10% increase will not be considered when 

calculating a pension benefit and therefore will not increase benefit payments to participants.

6. Delinquent Contributions and Withdrawal Liability

A contributing employer’s failure to contribute to the Fund timely at the new rate required by this Update 

to the Rehabilitation Plan (once effective) will subject the contributing employer to the remedies imposed 

on delinquent employers. The failure will also subject the contributing employer to excise taxes (equal to 

100% of the unpaid contributions) as provided under the Pension Protection Act of 2006. Additionally, 

this may result in a determination by the Board that the employer has failed to maintain (and thus has 

withdrawn from) the Fund, in which case such employer will then be subject to withdrawal liability.

Employers should note that the 10% increase in the contribution rate is considered required by the 

Rehabilitation Plan under Section 432(g)(3) of the Internal Revenue Code. Therefore, generally speaking,

for withdrawal liability purposes, the increase in the contribution rate is disregarded in determining the 

allocation of unfunded vested benefits to an employer used to determine the employer’s withdrawal 

liability. It is also disregarded in determining the employer’s highest contribution rate for the purposes of 

determining the payment schedule for withdrawal liability in the event of a withdrawal.

7. Decreases in Contribution Rates Not Permitted

The Board previously announced that the contribution rates in any collective bargaining agreement may 

not be decreased. Accordingly, the contribution rate in a collective bargaining agreement may not be 

decreased to avoid application of the contribution rate increase under the Rehabilitation Plan. See this link 

for further information regarding the Fund’s policies in this regard:

(http://afm-epf.org/RateReduction.aspx).

AFMEPF1419
Exhibit 7.10 

Valuation Reports 

AFMEPF1420
Milliman Actuarial Valuation `

Issued November 10, 2017 

American Federation of Musicians & 

Employers’ Pension Fund

April 1, 2017 Actuarial Valuation 

Prepared by: 

Kevin M. Campe, EA, MAAA 

Principal and Consulting Actuary 

Robert A. Behar, FSA, EA, MAAA 

Principal and Consulting Actuary 

Milliman, Inc. 

71 South Wacker Drive 

Suite 3100 

Chicago, Illinois 60606 

Tel +1 312 726 0677 

Fax +1 312 726 5225 

milliman.com 

AFMEPF1421








































Milliman Actuarial Valuation

Issued November 8, 2018

American Federation of Musicians & 

Employers’ Pension Fund

April 1, 2018 Actuarial Valuation

Prepared by:

Kevin M. Campe, EA, MAAA

Principal and Consulting Actuary

Robert A. Behar, FSA, EA, MAAA

Principal and Consulting Actuary

Timothy J. Herman, FSA, EA, MAAA

Principal and Consulting Actuary

Milliman, Inc.

71 South Wacker Drive

Suite 3100

Chicago, Illinois 60606

Tel +1 312 726 0677

Fax +1 312 726 5225

milliman.com

AFMEPF1462