Around 20,000 members of the American Federation of Musicians (AFM) will soon see a reduction in their retirement pay.
This comes after the musicians union confirmed its pension fund has reached a “critical and declining” status. The AFM will reduce pension benefits to prevent insolvency.
The pension fund, dubbed AFM-EPF, currently has $1.8 billion. Under federal law, the AFM had to unveil the reductions as the fund may run out of money within the next 20 years. Described as “painful,” trustees delivered the news to its members over the Memorial Day weekend. The benefit reductions will roll out next year.
On its frequently asked questions (FAQ) page, the AFM explained,
“As of March 2019, the Fund has roughly $1.8 billion in assets and about $3 billion in liabilities, which is the value of all the benefits that have been earned by participants for services already performed and that will be paid in the future. That means that the Fund is about $1.2 billion underfunded.”
According to the musicians union, the retiree population has grown faster than the active population. Since the AFM-EPF is a “mature plan,” benefit payments have also grown faster than contributions. While the union has bargained for additional contributions to the fund, unfortunately, these aren’t enough to “avoid running out of money.”
“With every passing month, we have to pay out much more in benefits than contributions bring in. For example, for the fiscal year ending in March 2018, while the Fund paid out $171 million in benefits, it received only $68 million in contributions. This negative cash flow is projected to continue – and worsen.”
The AFM cut will affect members who work or previously worked in the film and television industry under the union’s contract with the Alliance of Motion Picture and Television Producers (AMPTP).
Other affected members include those who work or have worked in sound recordings, at symphonies and operas, on Broadway, and in regional and traveling music productions.
AFM-EPF trustees have also applied to the U.S. Treasury Department for approval to reduce pension benefits.
They explained,
“Although reducing benefits will be painful, the trustees have decided to seek permission to do so because running out of money would leave all participants with virtually no benefits in the future.
“There is no practical way that investment returns and contribution increases alone will be able to close the long-term, worsening gap between the money coming in and going out.”
Featured image by the American Federation of Musicians.
Solution for this problem should have been part of the Pre72 Sound Recording section of the MMA. Maybe it is time for the RIAA, which seems to have given up nothing in the the compromise, to provide part of their ‘50% off the top (plus all legal expenses)’ out of the Section 114 monies and their capital interest in Spotify as a solution to this pension funding crisis?
Nah the don keeps the raise in the mob lol
They aren’t going to give a penny.