Musicians’ pension fund is ‘in critical and declining state’

Musicians’ pension fund is ‘in critical and declining state’


norman lebrecht

May 26, 2019

The American Federation of Musicians and Employers’ Pension Fund informed participants on Friday that the Fund is entering “critical and declining” status. This means that the Fund is projected to run out of money to pay benefits (or become “insolvent”) within 20 years.

Because the Fund is entering critical and declining status, the Trustees are now able to, and now intend to, apply to the government to reduce earned benefits under the Multiemployer Pension Reform Act in order to prevent the Fund from becoming insolvent.

More information here.

Last update here.

The consequences for thousands of musicians are alarming.


  • Anon says:

    This has been going on for years. Business as usual. It’s nothing new and nothing more alarming than the same news 10 yrs. ago.

    • DAVID says:

      Actually, it is considerably more alarming. What happened a few years ago is that the fund entered “critical” status, which is much different from “critical and declining” status — although one does lead to the other. Under “critical” status, the fund was already underfunded, but there was a hope that it might avoid insolvency if market performance, among a host of other factors, would be sufficient to restore it to financial health. “Critical and declining” means that the fund is now so underfunded that it qualifies for an application to the Treasury department in order to be legally able to cut benefits so that it can remain solvent over the next 20 years — the only remaining option if the fund is to survive, unless no change is made, disbursements remain the same, and the fund is essentially allowed to go to zero over the next few years (still an option, actually, if the Treasury department denies the AFM-EPF’s application). Many of us saw this coming as this year’s current stock market performance clearly was insufficient in order to avoid meeting the criteria for “critical and declining.”

      • Anon says:

        Yes, but they have been sending out so many of these letters over the years which are so frightening and so technical that it’s like the boy who cryed wolf too many times. The letters just keep coming.

        I’ve paid plenty into this fund and I don’t even understand what any of this means. How does it affect the average musician who’s paid into the fund exactly? I’m coming up on retirement age. Does this affect my social security benefits? Is this a private pension fund I can start drawing on at 65?

        • DAVID says:

          Dear Anon, to answer your questions:

          — how does it affect the average musician? No one knows at this point, but it very likely that benefits you earned for all work done under multipliers greater than 1 (roughly until 2010) will be cut. Work done at the multiplier of 1 (work done after 2010) will supposedly not be cut.
          — will this affect my social security benefits?
          — can I start drawing at 65?
          You can actually start drawing at 55, but the sooner you start drawing before 65, the smaller your payments will be (for instance, if you started collecting at 55, you might get about a third of what you would if you waited until 65). You definitely should wait until this whole matter is settled so that you know exactly by how much your benefits will be cut, because once you file you are stuck and once your benefits are cut 2 years from now, you will have no recourse.

        • Vissi D'arte says:

          Anon – Yes, it works exactly like social security and this is a pension fund that you can start drawing on at 65. If you go onto the AF of M website, you can calculate what your benefits are. The letters that they have been sending out over the years were notices that, because of the wretched state the pension fund has been in, they had to decrease the multiplier to calculate the dollar amount of the benefit your your payments into the fund will generate. By now, the multiplier is so low that young people paying into the fund will barely benefit from the fund by the time they retire. But for people close to retirement as you say you are, the benefit you will be getting after retirement could be substantial. I have done relatively little freelance union work over the last 35 years (maybe $10,000 – $20,000/year) and I stand to collect almost $20,000/year starting from age 65. That is, I WOULD have stood to get that much, but with the action of applying to the government under the MPRA, I will be lucky if I end up ultimately getting 2/3rd that amount. If I had invested the work dues I paid into this fund on my own, I would have done much better.

          During the recent CSO strike, the irony of CSO musicians seeing their local freelance player friends’ Defined Benefit pension fund going bust while they were adamantly claiming that only a Defined Benefit pension was acceptable to them because of its “risk free” nature was not lost on some. There were claims that the two were not comparable because the AFofM pension is a multi-employer plan, and is therefore not as secure. But in a recent article on the subject on Huffington Post:

          “(Multiemployer pension plans) were supposed to be safer. With so many employers paying in, a plan could afford to lose a company here or there due to bankruptcy or closure without putting the whole fund at risk.”

          There is an activist group that formed a couple of years ago called MPS (Musicians for Pension Security) that has been investigating why the pension fund has done so poorly, and they have discovered alarming mismanagement of the fund and have been attempting to whistle-blow about this. I am including a portion of their last mailing to interested members:

          “…when discussing the pension fund with your colleagues make sure they understand the facts and know the truth behind a few common myths that have been circulating for the past two years:

          Myth: The pension crisis was caused by external factors over which our Trustees have no control: a declining music industry and declining populations of active musicians versus retired musicians.

          Reality: MPS hired a renowned actuary, Tom Lowman, who has told us that’s just not that case. (See his analysis here.) Lowman says that the industry dynamics and demographics of the AFM-EPF are much more favorable than any of the other plans in critical and declining status that he’s seen before. Also, there is plenty of data showing that entertainment industry pension plans are much healthier and more robust than pension plans in just about any other industry, whether it’s manufacturing, transportation, retail and food, construction or the services industry.

          Myth: Expenses at the AFM-EPF are under control.

          Reality: There has been no real effort by the Trustees to curb expenses. The Executive Director makes over $425,000 per year. The Trustees’ own documents show that administrative expenses have increased in the past year from $15 million to $16 million. (see here, page 8)​

          Myth: The Trustees have taken all reasonable measures to grow employer contributions.

          Reality: According to the Trustees’ own projections (see page 18) they think that over the next 20 years, employer contributions will grow at the paltry rate of 3% per year. This compares unfavorably to the 6.9% rate at which employer contributions have been growing nationally for multiemployer plans. (See footnote 3.)

          After years of voicing concerns about accountability and transparency at the AFM-EPF very little has changed. As musicians now face the reality of cuts to their existing benefits in coming years, now more than ever, AFM members across the country deserve answers. Plan participants also have the right to ask for and demand change in the future. Musicians know that we can’t go back and undo the problems that have plagued the AFM-EPF for decades. However, we also know that we cannot simply continue on into the future with the same Trustees and the same processes which have failed us, somehow expecting a different result. In 2019, AFM members deserve better.

          [1]The peer group consists of five other pension plans, all in the entertainment industry. We used a standard measurement for cost efficiency, comparing the administrative expenses to assets under management. We found that the average in the peer group was 0.73% whereas the AFM-EPF is 1.21%. (Peer group was: Screen Actors Guild (SAG). International Alliance of Theatrical Stage Employees (IATSE), Producer-Writers Guild of America Pension Plan (PW), Directors Guild of America (DG), American Federation of Television and Radio Artists (AFTRA), and American Federation of Musicians (AFM).)
          [2]The comparison group is 23 multiemployer pension plans similar to the AFM-EPF with assets over $1 billion. The comparison was done by Meketa, AFM-EPF’s investment advisor.
          [3]Aggregate contributions to multiemployer pension plans from 2009 to 2014 increased by 6.9 percent per year, significantly outpacing the average inflation rate of 2.1 percent over this period.” Lisa A. Schilling and Patrick Wiese, Multiemployer Pension Plan Contribution Analysis, Society of Actuaries, March 10, 2016, The AFM-EPF trustees have calculated that between 2010 and 2016, sustainable employer contributions at AFM-EPF, factoring out what they called “noise,” have been increasing annually at 2.2%. Milliman, Presentation to AFM-EPF Trustees, May 16, 2017, page 6.

          • NYMike says:

            You have, of course, presented MPS arguments containing outright lies and half-truths at best – used to cause an upheaval in NY Local 802 politically. “Renowned actuary” Tom Lowman has admitted publicly to having no experience with a large MEP fund containing 5000+ employers and 55,000+stakeholders. In reality, there are no exact “peer” funds because of differences between employers’ royalties contributions and some funds combining health and pension into one fund.

            Answering each point here would take more bandwidth than I care to use. Nonetheless, the answers are out there.

        • NYMike says:

          You’ve paid NOTHING into this fund because managements pay according to their various CBAs. From your statements, I question whether you’re even an AFM member vested in the fund. Your final queries belie your status as a member.

          • Anon! A Moose! says:

            “You’ve paid NOTHING into this fund because managements pay according to their various CBAs.”

            That is false, or at least unhelpfully splitting hairs. Just because part of your compensation isn’t in a check direct to you doesn’t mean it’s not your money. I suspect s/he was being conversational and not bothering saying out loud the implied “paid to the fund on my behalf”

          • Anon says:

            Oh for ****’s sake. Why would I be receiving these letters or even care about this if I wasn’t “vested” in the fund?

            People move on. I worked as a freelancer & AFM member for quite a few yrs. before I won a good full time orch. position outside of the US. My pension will be ok here but it’s reduced by the no. of yrs. I worked in the US. I was working as an AFM member during those yrs. So yes, I am vested in this fund and it affects me very much.

          • Anon says:

            To NYMike: Read this article.

            “As of March 31, 2018, the Fund had 20,602 active participants; 15,328 retirees and/or beneficiaries, and 14,177 “deferred vested” pensioners.”

            ““Deferred vested” pensioners no longer work but haven’t applied for pensions yet. As an ex-AFM member working outside of the US now, I am one of those 14,177. We constitute 28% of those vested in this fund. Your comment belies your own ignorance.


        • DAVID says:

          To Anon: I should add that if you file earlier than 65, your monthly benefit will be set for life — in other words, it won’t increase when you turn 65, it will remain the same. However, if you do file before the cuts are implemented, your benefit would still be cut by the amount set by the fund and would then remain the same for life, which is why it is in your interest to wait until the cuts are implemented so you know exactly what your benefit will be.

    • Bruce says:

      …or 20

      • DAVID says:

        The fund has never been in “critical and declining” status before, so this is an unprecedented situation. The change lies in the fact, as the word “declining” suggests, that the asset base — in other words, the available funds available to be invested in order for the fund to grow — is actually declining due to its liabilities, i.e. the amount of payouts which have to be disbursed to current retirees. This results in a “death spiral” whereby the asset base continues to be further reduced, whereas liabilities not only remain unchanged but actually increase as the number of retirees also increases. So to present this as if it were nothing new is inaccurate.

  • Carlo says:

    …and yet there are members of AFM orchestras, of retirement age in most parts of the world, in the USA and Canada collecting salaries and pensions at the same time. Double dipping, so to say, and haemorrhaging a system put in place to protect musicians from exploitation, by doing just that. I believe in the Detroit Symphony, they have a 3 tiered option to diversify their pension plan. It’s dumbfounding that more orchestras don’t adopt a more active and diverse way of thinking about their pensions and, CONTROVERSIALLY, adopting a mandatory retirement age as is in place in every European country, so as to prevent inflated pay scales for people well past their date of expiration as well as passing on a tradition that needs young blood to evolve and continue.

    • Steve Proser says:

      In the US, mandatory retirement ages are illegal via the Federal Age Discrimination in Employment Act.

      • Spenser says:

        A law passed by the Senators and Representatives in Washington DC so that they may be able to keep their jobs and funnel money to themselves and their cohorts until they die.

    • SVM says:

      Carlo’s comment is factually incorrect: there is no mandatory retirement age in the UK, which is a European country (Europe and the EU are not coterminous, and, even if they were, “Brexit” has not yet happened). In the UK, it is illegal for an employer to compel an employee to retire on the grounds of age, unless the employer has an explicit policy involving an “Employer Justified Retirement Age” (EJRA). There are very few legally acceptable criteria for imposing an EJRA, and very few employers avail themselves of this option.

    • drummerman says:

      Chicago came up with a “more active and diverse way of thinking” which caused the musicians to on strike for many weeks.

    • Mick the Knife says:

      If they retire early, then pensions are paid out for a longer time. How can that possible help? You don’t know what you are talking about artistically either.

  • Brian says:

    Entitlements are bad for people.

    Starving 70 year olds on the streets are good; Making sure they have a roof over their heads gets in the way of progress.

    A seeming contradiction in terms… Our “Sociopathic Society” has arrived.
    This is the 21st century. Bye bye fat, lazy pension holders and “useless” musicians!

  • Sue Sonata Form says:


  • Barry Guerrero says:

    I’m just happy that I was able to play tons of union trust-fund gigs, decades ago. It was one of the few ways a musician could put some freelance cash in their bank account. Let’s hope they get it straightened out.