On July 9 and 10, for the first time in the existence of the AFM & Employers Pension Fund, the Fund’s employer trustees and union trustees will present contrasting positions on two important issues of Fund policy and plan design to an impartial third-party arbitrator. Under Pension Fund rules, the arbitrator will break the deadlock tie created when the trustees voted on these issues at their October 2000 meetings in New York City.
The issues – which are contained, for technical reasons, in four separate motions – concern employer trustee initiatives to raise the current $1,500 per year earnings requirement for vesting eligibility to $4,500 (with a proportionate increase in the quarterly earnings requirement), and a reduction of the “pre-retirement death benefit” from a multiple (65x, 90x or 100x, depending on the age at death) of the age 65 benefit to 100x the benefit amount at the age of death. For beneficiaries of members who die before reaching the age of 65, the latter proposal could reduce the value of this benefit by up to 50 percent.
In resisting these proposals, the union trustees argued that the Fund’s continued financial good health demonstrates that no such changes are required. In fact, they pointed out, making it more difficult for musicians to vest could discourage future participation and might, therefore, ultimately prove detrimental to the health of the fund.
The employer trustees took the position that earnings of $1,500 a year no longer constitute a significant enough attachment to the industry to warrant pension participation. Union trustees countered that argument by pointing out that industry attachment cannot be demonstrated solely by covered pension earnings, as is demonstrated by the situation that currently prevails in the jazz and chamber music fields.
The employers’ proposal to reduce death benefits seemed to have been stimulated solely in reaction to a very small number of instances in which a death prior to age 65 had generated a sizeable benefit. The proposal was made despite the widely shared understanding that this change would have no appreciable effect on the Fund’s finances. The union trustees’ arguments that, given the Fund’s continued growth and good health, its participants should be provided with the best benefit package possible, not a lesser one, proved unpersuasive to the other side.
As this is written union trustees Dave Schwartz and Hal Espinosa are circulating a petition objecting to these proposed changes, addressed to the employer trustees and signed, so far, by thousands of members. It is intended to be placed in the arbitrator’s hands, provided that a way can be found to make it part of the record of the hearings.
Under the Fund’s Agreement and Declaration of Trust, the arbitrator’s role is to cast the tie-breaking vote. It is hoped that his decision will be forthcoming soon after the July hearings.