The State of Our Pension Fund
by David Schoenbrun, Local 6 President
Last summer all participants in the American Federation of Musicians Employers Pension Fund (“the Fund”) received a report entitled “Annual Funding Notice.” It is a notice required to be distributed annually to all participants and intended to inform them (you) about the health of the Fund, focusing on questions such as:
What is the current funding percentage? This is the number revealing the general financial health of the fund – currently 81.6%, down from 85.7% the previous year, to be reevaluated April 2017.
What was the year-end market value of the Fund’s assets? As of April 2016 it was $1,704,000, down from $1,818,000 the previous year.
What is the legal status of the Fund? It is currently considered “critical,” worse than “endangered,” but better than “critical and declining.” The status is important because it takes all of the current financial information, including future obligations of the Fund (benefits to participants), and distills it into a label. This label has far-reaching consequences, and, among others, legally dictated the necessity of the Fund’s implementation of its 2010 Rehabilitation Plan. This Plan was and is intended to help bring the Fund back into financial health (the “green zone”) by reducing some benefits, eliminating others, and requiring an additional 1% (or 0.9%) contribution by employers over and above their negotiated rates in order to bolster Fund assets.
Many members who read this report when it was distributed in July, including me, understood immediately that the Fund was in some trouble and wrote to Fund Executive Director, Maureen Kilkelly in August, asking questions intended to elicit more information about the health of the Fund and prospects for its future. The Fund finally responded to my and others’ questions in first week of January in the form of a formal letter that was sent to all Fund participants and is published below in its entirety.
While this well-crafted document does provide much important information by way of historical background and context regarding the decline of the Fund’s assets because of the recession, it has also, perhaps inevitably, raised many more questions. They range from technical “how and whys” regarding the Fund’s asset allocations, investments and operational costs, to very personal concerns about whether members could completely rely on what they thought to be rock-solid guarantees of their current or projected retirement benefits.
As a Local AFM officer, I think it’s fair to say that I know more than most members about the workings of our pension benefits, but I freely admit that I am ill-equipped to serve as a proxy Fund representative, especially given the complexity of its financial mechanisms and the gravity of our members’ questions about its future. As a result, I wrote to Ray Hair, AFM President and Union-side co-chair of the Fund, on behalf of all eight California AFM Locals, asking that meetings between members and Fund representatives be convened in each Local so that members could ask questions and express their concerns directly. As of this writing I’ve heard back that the request is being considered by the Fund’s Trustees. In the meantime, President Hair suggests that we encourage participants to visit http://afm-epf.org/mailingfaq.aspx (a list of frequently asked questions that essentially reiterate information contained in the letter below) or call the Fund office at (800) 833-8065 with additional questions.