US musicians are told to expect lower pensions
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Today, the American Federation of Musicians and Employers’ Pension Fund informed participants that the Plan has applied to the U.S. Treasury Department to reduce earned benefits under the Multiemployer Pension Reform Act (MPRA). The Plan is currently in “critical and declining” status, which means it is projected to run out of money to pay benefits (or become “insolvent”) within 20 years. Under MPRA, if a Plan is in “critical and declining” status, the Trustees can apply to Treasury for approval to reduce participants’ benefits by an amount sufficient for the Plan to avoid insolvency. If approved, the benefit reductions would go into effect on January 1, 2021.
Here‘s what the Plan’s participants have been sent.
About 53% of participants would have no reduction.
About 45% of participants would have their benefits reduced between 0% and 19%.
Less than 2% of participants would have their benefits reduced between 20% and 40%.
Let’s see where the strike flags raise first.
Wouldn’t you have to see if the pension cut violates the current contract? Pension cuts affect retirees, not working musicians.
No to your 1st question – cuts affect everyone.
I remember my teacher complaining that her pension was next to nothing, and that was after decades playing in the top freelance orchestras in Manhattan, including television. How it can be reduced more is beyond me. And the AFM relies on Actor’s Equity to provide a nursing home for musicians, too.
During your teacher’s playing era, contractually – mandated contributions from managements were very low. They’ve been raised considerably in recent years even if still not able to overcome the Fund’s current shortfall.
What a bunch of crooks.
War is coming and it looks like a big one.
Pensions? Will be a thing of the past, as the war “effort” will soak up all the money.
No-one, and certainly not the federal government, is going to step in and bail the fund out. So what else can they do?
The percentage reductions suggest a few members (former conductors? concert masters?) are getting very large pensions presumably after receiving large salaries.
One could argue endlessly about fairness but at the end of the day but this seems, prima facie, fair to the large majority of members of the fund.
What’s fair about a 19% pension reduction? Or any percentage, for that matter?
The AFM have been hauling in fees for yonks. What the hell have they been doing with the money?
Any, even the most conservatively and well managed, pension fund relies on predictions and the market forces. If birthrates decline and if salaries are not keeping up with with productivity (read: the rich capitalists getting richer, the rest not) then changes in the predicted outcomes are not avoidable.
I think blaming the pension funds means barking up the wrong tree.
People would need to get out their pitch forks again and storm the plutocracy’s Bastille and demand a fairer distribution of the revenue generated in the economy. Generated mutually by capital investors and workers/producers. But the capitalists have it all.
But the way things go these days, I see people not storming the plutocracy’s Bastille, but Walmart for Black Friday. C’est la vie. Good night. Enjoy your retirement. Hope you have your medical bills covered as well.
Paying staff salaries … running meetings … fees for financial services … office expenses … the usual stuff.
Whether they’ve done an efficient job doing so is another matter.
Fees for yonks?? Irrelevant. The AFM-EPF is managed by a board both from managements and union side trustees. Whatever “fees” the AFM earns has nothing to do with the Pension Fund. Fund income comes only from multi- employer contributions contractually-mandated and by investments. The Fund’s current shortfall is the result of circumstances too complex to explain here. That said, remarks by uninformed posters here are nothing but drivel.
Major orchestra conductors are not subject to AFM contracts or Pension provisions. Concertmasters in major orchestras are mostly covered by their own orchestras’ private pension funds. In orchestras whose pensions are with the AFM-EPF, pensions contributions are paid on minimum salary, not overscale. So many uniformed posters on this topic.
If the U.S. government can bail out the banks to the tune of $ 700 billion, then saving working people’s pensions for a fraction of that should not be an issue. Take it from the bloated defense budget. Accountability for the Pension Trustees is another matter. I have ‘paid in’ for nearly half a century and any cut to my modest pension will present a hardship.
The banks paid it back.
Well, because they can create money out of thin air. Literally.
The pension funds can not.
Jay – you’ve actually paid in nothing since pension contributions are by management only. The trustees issue is complex – don’t swallow Krauthamer’s BS. That said, I agree with you re defense budgets and cuts.
You need to check your facts.
And the facts are??
Why I put ‘paid in’ in quotes, Mike. We worked all those years with the reasonable expectation that the pension would be there in our retirement. Despite damaging the global economy, none of the banksters went to jail, paid back or not, and the people who lost their homes didn’t get them back. I don’t claim to have any answers, but the prospect of having to manage with (even) less is not encouraging.
Jay, I hear you….
Years ago millions of musicians were employed making commercials and by hotels, nightclubs, radio stations, dance halls, etc. and their payments to the funds constituted the lion’s share of the contributions. Almost of all those jobs no longer exist and it is now the classical musicians whose payments are the largest to the fund and not enough for the fund’s long term health.
The pension crisis includes all multi employer pension plans in the United Staes, not only the AFM. There are a wide variety of reasons for the funding crisis. It’s definitely bad news for musicians.
See the article below:
https://www.nytimes.com/2018/02/18/business/multiemployer-pension-crisis.html
All those decades you spent learning to play Beethoven’s 5th, you could have spent becoming a Pro 80% field goal kicker, done that for probably <10 years, made $millions, then retired rich. Call it life choices. And social value.
The solution takes only a little creative imagination:
One rich TV personality proposed getting relatively minimal donations from all his mega rich friends to bribe a politician to leave office.
The shortfall is only about $1 Billion. I bet whole orchestras would gladly give over a free one-hour concert, even pop, to say a few hundred billionaires and their friends around the country for a chump-change donation toward revitalizing their pension fund. Throw in a percentage to animal shelters and helping the environment just to sweeten the pot. I can just see it: The Annual Warren Buffet Benefit Pension Concert to Save Old Musicians.
The Chicago Symphony is phasing out DB pensions. The LA Phil no longer offers them. It shouldn’t come as a surprise to anybody that musicians’ pensions are in trouble, along with miners’ and Teamsters’ pensions, and even Netherlands pensions which are the best managed pensions in the world. Calif. has $500 billion in unfunded pension liabilities. Those of us depending on Social Security have been hearing for the last 30 years that SS is running out of money. Why do municipal, state, school, and multiemployer pensioners think their pension plans are solvent?
You’d think under the current administration and a stock market on steroids, pension funds would be awash in cash, wouldn’t you? In managed funds, you want smart investors who know how to diversify–within the law, of course–to endure stock market downturns. All we heard about since 2000 were the disastrous, underfunded PERS. Since the stock market took off like a Mannheim Rocket, I’ve heard little about PERS.
One commenter mentioned the dwindling number of live AFM performance opportunities and I think he/she’s spot on. Sort of like Social Security and the dwindling number of contributors because of outsourcing and declining birthrate. Good Luck, friends!
One more thing: if the AFM is not going to be there for you when you retire, then serious consideration should be given to abandoning the idea.
Maybe find another fund manager.
Maybe invest your contribution on your own, into a 401K or a Roth IRA. Go together with some friends and buy investment property. Peer Lender Clubs. Buy a Hotel in DC. Just trying to help.
Fund contributions are not the individuals’ to manage. They come from management directly into the Fund as contractually-mandated. Geez, can’t you read??
Roger, the fundamental issue is that people are living longer. This means that the pension funds are paying out for longer than anticipated. For instance, if you expect to live 20 years after retirement then it will cost twice as much compared to if you expect to live 10 years after retirement.
The solution is one or all of the following: (i) later retirement; (ii) smaller pensions to the retired; (iii) larger employer/employee contributions.
IRS rules forced the AFM Pension to distribute out more money than was prudent since 2000. Now the government needs to own up to what they forced the pension to do against its own long-term interests.