American Federation of Musicians and Employers’ Pension Fund is a retirement plan available to Local 802 musicians in all fields and styles of music, providing musicians with payments in monthly installments throughout your lifetime. This fund allows musicians – most of whom have unusual employment schedules and work for many different employers, with a portable mechanism to accumulate individual pension credits toward their retirement.
The Fund was created in 1959 by former AFM President Herman Kenin during negotiations for a new five-year agreement between the AFM and the phonograph record industry. By mid-1960, pension coverage was extended to network radio and television, AFM traveling engagements and the AFM’s jingles contract. In July of 1961, symphony orchestras, arrangers, orchestrators and copyists became eligible for inclusion in the AFM-EP Fund.
The American Federation of Musicians and Employers’ Pension Fund is administered by a Board of Trustees, a group consisting of eight AFM union officers and eight employer representatives.
The day-to-day operation of the Fund is the responsibility of a Fund Administrator and a staff of approximately 70 people. Their work includes ensuring that contributions are received and credited, maintaining eligibility files, processing pension applications and contributions, answering questions and sending out pension checks each month to participants and their beneficiaries.
The AFM-EPF pension plan is governed by the Employee Retirement Income Security Act (ERISA) and is subject to oversight by the federal government. Investment managers invest the Fund’s assets in various asset classes, such as bonds, stocks, hedge funds, private equity, alternative investments and real estate. The Fund is partially insured under U.S. law by the Pension Benefit Guaranty Corporation, which guarantees a portion of vested retirement pensions.
How Can a Musician Become a Participant in the Plan?
Any musician that works or performs for an employer that signs a union agreement regarding wages and pension contribution rates can participate in the Fund.
An employer may, for example, be a theatre producer, a symphony orchestra, an incorporated leader, a record company, a club or a manager. A musician may not make contributions to the Fund on his/her own behalf unless incorporated, since the Fund is an “employer only” fund.
The union agreement or contract with the employer must include certain necessary language and specific provisions for pension contributions to be made to the plan. The amount that is contributed to the pension plan is negotiated between the union and your employer.
Vesting in the Plan
As with any employer offering a pension plan, a certain amount of time and level of contribution resulting from work under a union agreement must be made before one becomes “vested” or eligible to receive a payout from the plan. Once you are a vested member of the plan you cannot lose any pension credits you have accumulated, even if you become inactive in the union. However, under a 2014 federal law entitled MPRA, accrued vested pension benefits can be cut if the pension plan runs into severe financial trouble.
The vesting period for participation in the AFM-EPF is only five years. Being “fully vested” means that a participant has earned a right to a regular pension that can only be cut according to procedures set forth by MPRA. A musician may accrue the five years on a quarter-year, half-year, three-quarter-year or full-year basis.
The more work you do under contracts that have pension provisions, the greater the benefit you will receive when you retire. But these quarter-year vesting provisions make it easier to become vested in the pension plan and to secure a guaranteed pension benefit.
The current regular pension benefit from the AFM-EPF consists of monthly payments to you based on (1) total contributions credited to you, and (2) your age on the effective date of your pension. As noted, however, under the 2014 federal law, MPRA, accrued vested pension benefits can be cut if the pension plan runs into severe financial trouble.
The regular pension benefit is generally paid as a life annuity with a guaranteed amount or as a husband-and-wife (joint and survivor) pension.
Under the husband-and-wife (joint and survivor) pension, monthly payments will be lower because the expected payment period is for the remainder of both your and your Joint Annuitant’s lifetimes. The exact amount of adjustments will depend on the age difference between you and your Joint Annuitant.