Like other union pension funds, the American Federation of Musicians’ pension plan is underfunded…and looking to cut union members’ pensions.
With nearly 50,000 musicians expecting to retire someday, the trustees of the American Federation of Musicians and Employers’ Pension Fund has joined a growing list of underfunded union pensions seeking to cut their retirees’ pension payments.
“Trustees of the American Federation of Musicians and Employers’ Pension Fund (AFM-EPF) announced the evening of May 24 that they will apply to the U.S. Treasury for a reduction in member benefits, due to the AFM-EPF’s “critical and declining” status – meaning the fund is projected to run out of money in 20 years,” reported NPR.
In 2014, then-President Obama signed the Multiemployer Pension Reform Act of 2014 into law.
“The legislation,” according to the Pension Rights Center, “permits deep pension cuts to retirees in certain financially-troubled multiemployer plans.”
With only $1.8 billion in assets and $4.8 billion in liabilities, according to the plan’s most recent financial reports available, the pension is more than $3 billion underfunded.
“The musicians’ national union has seen large drops in membership, less and less work under contract. And, seemingly, for musicians my age, there was no real serious effort to address changing the future,” says Adam Krauthamer, the newly elected president of the New York local and the executive director of Musicians for Pension Security.
“The AFM-EPF is in crisis because it has not been managed nearly as well as the others in our peer group of pension funds,” Krauthamer’s group states on its website.
It goes on:
- Over the past decade, our fund yielded a 3.2% net average return. That’s 1.0% below our already low custom benchmarks (estimated returns on investments which are calculated by Trustees and Fund Administration) and drastically below the industry-wide yield of 6.8% (according to Pension and Investments magazine). Compared to our peers, we are underperforming.
- Our pension administration spent over $248 million dollars in administrative expenses and investment fees over the past decade, while returning only 3.2% (5500s). Last year, for example, the Fund admitted to losing $10 million in value (AFM-EPF website), but paid $25 million in administrative costs and investment fees. Additionally, our Fund’s expenses have been unnecessarily exorbitant for years. We spend $190K/month on rent in one of the most expensive real estate markets in the country, pay excessively high salaries to fund administration, high fees to investment managers (5500s), and are unnecessarily overstaffed in comparison to similar funds. Not only are we paying employees high salaries, but we are giving them raises almost every year in the past decade. We are rewarding them for bad performance.
“This is going to have devastating effects on our community,” Cenovia Cummins, a violinist, told NPR. “To work as hard as you do and then be told you don’t have a retirement… You don’t want to get older with so much uncertainty in your life. People in my age bracket are going to see the deepest cuts. All the money we’ve put into this pension and it not being there… It’s such a betrayal.”
