The AFM pension: something worth crowing about
Volume 112, No. 10October, 2012
Your pension is alive and well and living in New York City. For
Local 802 members who have been regular participants in the plan since the 1990s
or before, this may seem like a hollow statement. But for musicians concerned
with developing some retirement security over the years, it is a statement that
cannot be argued with.
The pension fund has been getting bad press on some social media
blogs over the past two years, due to circumstances deriving from the 2008
market fall and the complications brought about by changes in ERISA, the law
that governs pension funds. But the bad press is unwarranted.
The American Federation of Musicians and Employers Pension Fund
(let’s just call it the fund) is 89 percent funded as of April 1. Why is this
a good thing? The bean counters who look at pension funds have analyzed the
health of the fund using tools that project out for the next 35 years. Their
analyses project that everyone who is in the fund will get their pensions for
the next 35 years and beyond, at which time the fund will still be solvent. That’s
something even Social Security can’t boast.
So why the bad press? Mostly, it’s because during the late 90s
and early 2000s, the fund was the recipient of investment returns that were
based on the housing and dot com bubbles, the same as almost everyone else who
was involved in Wall Street investments during that time.
The formula that determines benefits resulted in pension incomes
more than 4 times what they are now and came to be considered normal.
But, with perfect hindsight, everyone knows that the markets of
that period of time were anything but normal and resulted in the hurt and pain
many are feeling due to the excesses of that period of our economic history.
The difference between the fund and other investments that people
made on their own, is that the fund has paid out (and continues to pay out) all
of its promises and continues to offer reliable benefits (albeit less than the
boom-time benefits of the 90s) for musicians who get vested in the fund.
The fund pays out retirement income to those musicians who are
vested participants of the fund according to a formula that centers on what is
called a multiplier.
Any vested participant in the fund will receive a pension dependent
on the amount of contributions that were made on that participant’s behalf.
So, to state the obvious, your pension depends on how high your
pensionable wage is and how many engagements you perform under pensionable
Under the current formula a vested participant in the fund can
expect to receive in retirement income an amount equivalent to 1 percent a month
of the entire accumulated amount that was contributed on behalf of the
This means that in 100 months the participant will have received a
retirement income equal to the total amount of employer contributions.
A hundred months is approximately 8 years and 4 months. So if I
retire at 65 with all contributions based on the current multiplier, when I’m
73 years old I will have received an income equal to the funds that were
contributed on my behalf. If I live to be 81 or 82, I will have received twice
what was contributed. If I am lucky enough to live to age 90, I will have
received about 3 times the amount contributed.
Of course, since the current multiplier applies only to benefits
earned after 2009, for those who earned benefits before 2004, it will take far
less than 100 months to receive a pension equal to the total amount of employer
As musicians work in recording, in Broadway and Off Broadway shows,
under the Single Engagement contract or under numerous collective bargaining
agreements in the symphonic field, they are amassing a pension by virtue of
But we all know that many musicians are left out of this structure. That is
what the Justice for Jazz Artists campaign is all about. The success of this
campaign will mean that many more musicians will be working with the secure
knowledge that at the end of their careers there will be some retirement
security waiting for them. The good news is that the AFM pension fund is the
best bet for a musician’s retirement security. Most musicians have no other
option and that’s why it’s crucial to fight for the cause of including as
many musicians as we are able.