The largest association of musicians in America announces pension cuts: NPR

"The pension is a symptom of a much larger problem related to the AFM and what was going on at 802 local level," said Adam Krauthamer, newly elected president of the New York local and Executive Director of Musicians for Pension Security. educates musicians and seeks solutions to this problem. "The national musicians union has seen a significant drop in the number of its members and less and less contract work, and apparently for musicians my age," said the 38-year-old, "no serious effort has not been deployed to change the future ". "

In March 2019, the fund's assets amounted to $ 1.8 billion, against $ 3 billion in liabilities, placing the AFM-EPF at a critical funding threshold of 60%. . As a result of this change in status, fund administrators turned to the US Treasury using the Multi-Employer Pension Reform Act (MPRA) to reduce member benefits and prevent insolvency.

"Although reducing the accrued benefits will be painful," reads the fund's website, "the trustees have decided to apply because it's better than the alternative, which is running out of money." "The changes will not happen immediately – regular benefits will be paid during the MPRA application process, and changes are not expected to take effect until the end of the year. 2020 or early 2021. The AFM-EPF is also campaigning for congressional legislation to protect 120 people in the same way. multi-employer pension funds in the event of insolvency. "The stakes are too important to avoid action, pending the action of Congress," reads the statement of the fund.

"It's going to have devastating effects on our community," said Cenovia Cummins, a freelance violinist on Broadway and in orchestras around New York since the mid-1980s. "Work as hard as you and then you're told you You do not want to age with so much uncertainty in your life. People in my age range are going to see the deepest cuts. All the money we have we put in this pension and the fact that there is none … It's such a betrayal. "

The aging of the union has had a major impact on the pension fund. According to the fund's FAQ page, this is an "established plan" as the retiree population has grown faster than the labor force, meaning that benefit payments are increasing faster than contributions. Although the union has negotiated additional contributions into the fund, enough to avoid running out of money. "During the fiscal year ended March 31, 2018, the fund paid out benefits. amounting to $ 171 million, but received only $ 68 million in pension contributions.In a statement to NPR, the pension fund writes: "This negative cash flow should be maintained – and s & # 39; 39; worse. Each year, if the return on investments does not close this gap, the fund must use assets, leaving less of an asset base to generate investment returns in the following year. "

Another part of the problem is the lingering fallout from the 2008 economic slowdown, when the fund lost 40% of its value in just 18 months – according to Adam Krauthamer, about $ 800 million. Yet, although most pension funds have recovered over the years, the AFM-EPF has fallen behind, he said. "From 2008 to 2018, this 10-year period, according to the documents and consultants of our own trustees, we ranked last, we were in the 99% out of 100% I think our return on investment, deduction made investment costs, was 3.2% And we have incredibly high administrative costs. " The Fund challenges this figure, citing an average annualized return of 9.4% (based on a lower amount of assets after the downturn). In any event, a class action lawsuit in 2017 alleges that fund managers took a series of risky investments to counter losses after the downturn, which trustees claim are "unfounded".

The Musicians for Pension Security website offers a comparison between the AFM-EPF and AFTRA funds, which are similar in size: between 2009 and 2014, the musicians' fund disbursed $ 50 million more in fees and expenses than the AFTRA fund . According to Chase, this comparison is inaccurate for the fund: "The AFM-EPF has more than twice as many employers, several times more collective agreements and several thousand participants".

In fact, the pension crisis is one of the reasons why Krauthamer, French horn player with several credits on Broadway, was elected as a result of an insurgency campaign in 2018. The Local 802 represents musicians at the New York Philharmonic, the Metropolitan Opera and Broadway, among others: and its members voted by two votes to one for Krauthamer to replace the incumbent, Tino Gagliardi. (Gagliardi still remains a trustee of the pension fund.)

All pension participants should not receive reduced benefits. Due to the protections provided by the MPRA, participants aged 80 and over, as well as those receiving a disability pension, will not benefit from any reduction. Between the ages of 75 and 79, there will be a sliding scale to determine partial reductions. These protections also apply to survivor benefits. But for 40% of AFM members – its younger population – the reductions determined by the MPRA process will become permanent.

As the president of Local 802, the union's largest local, Krauthamer is attempting to make changes at the national level, with proposals for the upcoming AFM Congress, led by the National President. Ray Hair, in June. "We proposed to include two experts on the board: one in actuarial science, the other in finance," he said. "I think it could help us a lot, we have suggested that the fund hold regular meetings, and we suggest that they try to increase employer contributions, which we are trying to do." – here in New York, we'll see what happens. "

According to Krauthamer, the bottom line is "it affects all musicians. Some more than others, but it is something that, if we do not treat, you know, my generation will not have the same future as the generations waiting for us. And frankly, future generations are seriously considering serious reductions in end-of-career benefits. And to say that it is unfair is a euphemism. I mean, it was not a present. It was money earned, withdrawn from their salary. And we are now at the point where we call for accountability, transparency and fund change. "