‘I’m new to the union. How do I earn a pension?’
Volume CX, No. 4April, 2010
Here’s how the pension fund works. Every time you play a union job – a Broadway show, a union freelance classical performance, a union club date – your employer puts a small amount of money into the AFM pension fund on your behalf.
This money does not come out of your wages. It is a separate payment, and over time it adds up.
Let’s say you’re 20 years old and you’re just starting to play your first union jobs. Imagine that you are able to get an average of 10 union gigs per month. Each job pays $200 in wages and 10 percent pension ($20).
Using these numbers, at age 65 you can expect an annual retirement of about $13,000 a year from the AFM Pension Fund.
(That’s assuming that the fund keeps its current rate formula in place. All of us are hoping that the economy will recover soon and that eventually the pension fund’s payout will increase again.)
That theoretical example is for an occasional freelancer. If you manage to win a steady chair on Broadway or in a major union orchestra, your pension could be much, much higher.
Remember that this pension money is guaranteed. If the stock market crashes, you are still guaranteed your monthly check. That’s how this fund – which is called a “defined benefits fund” – is different from a 401(k) savings program.
(The only way you would lose your pension entirely would be if our pension fund went insolvent. No one believes that is likely. And even then, the federal Pension Benefit Guaranty Corporation would guarantee you a minimum monthly pension.)
If you are an occasional freelancer, there’s something very important you need to know about our pension fund.
To be guaranteed a monthly pension, you first have to “vest.”
To vest in our fund, you need to keep playing union jobs until you earn a total of five “vesting credits.”
If you play $3,000 or more in union work per year, you earn a vesting credit. But you can play as little as $750 in union work and earn a quarter credit. Over time, you can become vested.
However, if you ever stop playing union gigs entirely before you are vested, you can lose all the pension you have built up, and you would have to start over from scratch.
So once you start playing union jobs, it’s extremely important that you keep it up and get vested.
In summary, the way to build up a good pension is to play union jobs. The steady union gigs include Broadway chairs and positions in union orchestras.
There are also freelance orchestra jobs, club dates, wedding gigs and recording work, all of which can pay pension.
What if you can’t get a union gig? Local 802 has an excellent track record of turning nonunion jobs into union jobs. That’s called union organizing. So when you get called for nonunion gigs, call us. Wouldn’t you like those gigs to pay into your pension?
Finally, there are some creative ways to make your own union gigs. If you perform private house concerts or give clinics, you can write your own union contracts using the union’s LS-1 form. Contact Jim Hannen at (212) 245-4802, ext. 141 for details.