Before we take a look at the document most SAG/AFTRA members have heard about but few have seen, let’s look at a couple of trade articles to put it proper context.


The Hollywood Reporter

SAG/AFTRA Merger: Leaked Mercer Report Raises Questions About Opposition Lawsuit (Exclusive) by Jonathan Handel  (2/23/2012)

SAG AFTRA Logo - P 2012

Does the 2003 study prove the anti-merger case as claimed? It’s time for union members to judge for themselves.

For almost a decade, proponents of a SAG/AFTRA merger have been haunted by the long shadow of a confidential study that opponents say proves that merging the unions would undermine SAG members’ pension and health benefits. Observers and activists generally feel that the study caused the defeat of a 2003 merger attempt that failed by 2 percent,

Indeed, just yesterday, merger opponents told a federal court in their litigation filing that the nine-year old study was still valid, apparently notwithstanding a myriad of intervening changes in the economy, plan details, the entertainment industry, and allocation of television work between the two unions.

“Based on the conclusions of the 2003 Mercer Report, Plaintiffs and the SAG membership will be imminently and irrevocably harmed” if merger proceeds, said the complaint, including by “diminution in value of member benefits, union funds, pension benefits, (and) health benefits.”

Likewise, in an interview with The Hollywood Reporter yesterday, SAG board member Anne-Marie Johnson, a plaintiff in the lawsuit, said that the Mercer Report had concluded that “any merger of the SAG pension and health plan with the AFTRA health and retirement plan would cause a diminution of benefits to SAG members.”

STORY: Actors Equity Endorses SAG-AFTRA Merger

Days earlier, another plaintiff – anti-merger activist and former SAG board member Michael Bellwrote that the Mercer Report “clearly showed a dimunition [sic] of benefits if SAG merged with AFTRA.”

But there’s a problem with this narrative: the report doesn’t “clearly show” any such thing. On the contrary, the 2003 document says that pension plan costs were likely to go up or benefits go down “with or without a merger” (p. 28).

Regarding the health plan, the report lists a variety of differences between SAG’s plan and AFTRA’s; the SAG plan looks better in more respects than AFTRA’s, but the report draws no conclusions as to what a merged plan might look like. It also lists various administrative savings that a merger could bring, but manages to quantify only some of them, and draws no conclusions as to whether the savings would make a material difference in benefits or plan health.

The report also speaks of “the broader benefits of a merger” (p. 5), a phrase scarcely consistent with the way it’s been publicly characterized by merger opponents. Ironically, those activists – who criticize AFTRA as being too compliant with management – adopted their gloss on the report from a leaked memo prepared by a studio executive who serves as one of the management-side trustees of the SAG P&H plan.

The Mercer report has also emerged as the archetype of the “impact report” that merger opponents demand that guild officials perform and excoriate them for refusing to do. They reject as inadequate the “feasibility report” the union prepared last month, which stated that plan mergers were legal, common and often beneficial, but didn’t analyze actuarial data specific to the SAG and AFTRA plans.

Instead, for instance, yesterday’s lawsuit echoes a call that the union “provide at least as much due diligence as was provided by the Mercer report.”

Likewise, Bell described with evident approval a guild member at a recent meeting who “confronted (union officials) about why SAG has not presented a Financial Impact Report like the Mercer Report from 03.” In addition, Johnson told THR the Mercer Report was “a detailed impact study,” and said that “a similar impact study” should be done now.

The difficulty with this theme is that the 44-page report is so hedged with alternatives, qualifiers and open-ended questions that it’s unclear whether an undecided union voter would find much value in the report, or even an updated equivalent.


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.”

More study

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.

More doubts

“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.

Now a look at that memorandum which it seems was seen by just about everyone except the membership. (retyped from the original document)

A Memorandum

Date:               4/8/2003To:                   Helayne Antler, John McGuinn, Ed O’Neill, Alan Raphael and Ira Shepard

From:              Sheldon Kasdan

Ext:                  7-1735

Subject:          Mercer Report

Copies:          Bruce Dow and Mark Hess


“In preparation for our April 8, 2003 conference call to discuss the Mercer Feasibility Study

(the “study”), I have reviewed the Study and based upon the following points raised by Mercer in the Study, I have concerns about any potential merger of SAG and AFTRA Health and Pension Plans being in the best interests of the SAG Plans’ participants.

  • The Mercer Report notes that AFTRA has a wide variety of contribution rates, many of which are lower than SAG’s contribution rates, and the average annual employer contributions per participant are significantly lower under AFTRA than SAG. Mercer concludes that “Even in the most optimistic AFTRA scenario, it appears that SAG (following the introduction of its participant premium) is generating much greater employer contributions per participant” (See page 12 of the Study). Therefore, a merger of the Health and Pension Plans will result in the subsidization of AFTRA participants by SAG participants.
  • In order to deal with the disparity of contribution rates noted above, Mercer suggests that the disparity in employer contribution levels and the various unique rates involved “could be offset by eligibility thresholds and/or participant premiums”. (See page 6 of the Study). 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.
  • The Mercer Report notes that both Health Funds experienced significant operating losses in 2002, with AFTRA’s operating losses being worse than SAG’s. Mercer further notes that SAG’s 2003 forecast shows SAG generating a small operating gain in 2003 but that AFTRA’s forecast shows another significant operating loss for 2003. Mercer added that changes which will be implemented on July 1, 2003 (See Mercer Report page 15). Additionally, on the issues of health reserves, Mercer reports that AFTRA’s reserves will continue to erode significantly in 2003, while SAG’s are forecast to increase modestly. (See Study page 16). The question arises whether it is prudent for SAG Trustees to be considering a merger of the SAG Health Plan with a Health Plan in worse financial shape than itself. It is important ot note that there is no information contained in the Mercer Report which suggest that sufficient savings will result from a merger to improve, or ev3en maintain status quo benefits for SAG (or even AFTRA) participants.
  • The only opportunities for savings noted by Mercer in the Health Fund section of the Study results from the institution of a new “best fit” PPO provider network arrangements, the implementation of a new “best-in-class” Rx arrangement, and the combination of a single set of health vendors. However, the Plans do not have to merge in order for 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.
  • As to pensions, Mercer is recommending one (1) Plan that would cover SAG and AFTRA participants (maintaining three (3) separate plans would result in significant administrative costs). However, from the Mercer Report it does not appear that one (10 Plan may be practical or beneficial to participants. Mercer notes the likelihood that funding and investment issues for both Plans will result in reductions in benefits for participants (See pages 28 and 29 of the Study) and the differences in contribution rates (see the first bullet point above) “could cause one group (SAG) to subsidize the other”. (See page 31 of the Study). In addition, (1) the disparity between SAG’s funding standard account credit balance ($290 million dollars ( and AFTRA’s funding standard account credit balance ($8 million dollars) (see page 26 of the Study): (ii) the fact that SAG’s costs are about equal to expected contributions with respect to the funding of future benefit accruals while AFTRA’s costs are about double (see page 26 of the Study), (iii) and the fact that the AFTRA Plan is less funded than the SAG Plan on a withdrawal liability basis (see page 25 of the Study) are also significant concerns.
  • Lastly, while the Mercer Report provides estimated data on the administrative costs savings of a merged plan, it does not provide any projections of cost savings to the SAG Plan or explain what would be gained by the SAG Plan by a merger. In fact, the Mercer report notes that “consolidated technology could result in significant data conversion and retention costs”. (See page 34 of the Study).”


  1. Based on the March 2003 Mercer Report, the Management Trustees have concluded that it is not in the best interests of Plan Participants to consolidate the SAG-Producers Pension and Health Plans with the AFTRA Health and Retirement Plans because it would result in a diminution in benefits and an increase in administration costs.
  1. Notwithstanding the foregoing, in deference to the Guild Trustees, the Committee authorizes the Administrative Director to further study this matter in light of the concerns outlined in item 1 and to discuss this at the meeting of the Board of Trustees in July, 2003.
  1. Any out-of-pocket costs and the cost of the SAG-Producers Pension and Health Plans’ consultants incurred for such study between now and the July, 2003 Board meeting shall be reimbursed to the Plans by the Screen Actors Guild


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