Archive for February, 2010

Pension Fund Trustee Appointment

The U.S. Pension Fund (AFM-EPF) has both Union and Employer Trustees. AFM President Thomas F. Lee has announced that the Employer Trustees have appointed Bill Thomas as an additional Employer Trustee. Mr. Thomas is the Senior Vice President of the New York Philharmonic Symphony Society.

Pension Fund Meeting in Las Vegas

Meeting in Las Vegas
Funding levels
Red Zone and Rehabilitation Plan
Plain Talk
Pension Fund Staff
RMA Helping Out
Politics
As you are aware, the Trustees of the Pension Fund (AFM-EP Fund) have reduced the Benefit Multiplier for benefits earned for employment on or after January 1, 2010 to $1 per month per $100 of Employer Contributions (Full Retirement at Age 65) and have imposed other changes as well.
Those of us in the Recording Community have been following the profound changes at our Pension Fund very closely.  We all understand that anxiety and fear are real emotions being sparked by real problems at the Pension Fund. RMA will be standing shoulder to shoulder with each of you to ensure that this crisis is dealt with effectively and rationally. We owe this to ourselves, our families, our colleagues, and to the next generation of musicians.
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Meeting in Las Vegas
On Monday January 11, various Local Officers, Player Conference representatives and others attended an AFM sponsored meeting in Las Vegas to discuss Pension Fund changes and the basis for them. RMA representatives carried the concerns you had previously shared with us via phone and email, and together with others in attendance at that meeting, we posed a range of questions to the panel which had been assembled.
Participants on the dais for that January 11 meeting were Pension Fund Executive Director Maureen Kilkelly and key members of her staff, Fund Director of Pension Benefits Vinni LoPresti and Fund Director of Finance Will Luebking. Representatives from firms who perform professional consultative services for the Fund were also on the panel. Those participants were attorneys Anne Mayerson and Rob Projansky from the law firms of Bredhoff & Kaiser and Proskauer Rose, respectively; Kevin Campe of the actuarial firm Milliman Inc.; and Gary Broder of Salibello & Broder, the Fund’s auditing and accounting firm. AFM President Thomas F. Lee moderated the meeting and offered further information in his capacity as the Chair of the Union Trustees.
The Fund has Management Trustees as well, though none of them were in attendance. Current Union Trustees Gary Matts and Phil Yao were in the audience along with former Trustees Bill Moriarity, Ed Ward and Hal Espinosa, though none of the foregoing were there as panelists or “presenters” of data. RMA Representatives in attendance were Steve Dress, Marc Sazer and Phil Ayling.
Presentations were made about a variety of topics, including the current and projected financial status of the Pension Fund, the nature of the Fund’s investments, the additional changes which may be forthcoming and the legal foundation which governs the Fund and its Trustees. Our Pension Fund is facing serious economic challenges going into the future. Many Pension Funds are in a similar situation and are all hopeful that the U.S. Government may provide additional relief, but that is solely speculation at this point.
The predicate to this meeting in Las Vegas was the October 15, 2009 resolution adopted by the Fund’s Trustees. That resolution said in part:
“… the Trustees recognize that reducing the multiplier to $1.00 will cause hardship to participants because future pensions will be significantly reduced if this multiplier remains in place for a long period of time, and are committed to restoring the multiplier as soon as the Fund’s financial condition permits them to do so”
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Funding Levels
As a result of information presented at this meeting in Las Vegas, it is clear that our Pension Plan is severely underfunded. In addition, despite a Trustee commitment to restore the Benefit Multiplier (the previous multiplier put in effect on May 1,2009, was $2), raising the Multiplier to any number higher than the current $1 will likely not happen for a long time.
For musicians in the middle or at the beginning of their earning years, the nature of their previously expected retirement benefits will be reduced tremendously, even if their employment remains stable. We know how sobering this is for all of you, just as it is for each of us who attended the meeting on your behalf.
By way of background, when a Pension Plan is fully funded, it has all the assets and anticipated revenue required to cover all current liabilities. Principal among those liabilities is the obligation of ongoing payments to current retirees and beneficiaries, as well as future benefits which have already been earned that will come due to currently vested Plan participants not yet receiving benefits.
In lay terms, a Plan with projected assets equivalent to projected liabilities would be described as having a Funded Percentage of 100%. Pension Funds with Funded Percentages greatly in excess of 100% can examine the possibility of increasing benefits for participants, while those with Funded Percentages significantly below 100% have to examine avenues for bolstering that percentage.
On April 1, 2007, the AFM-EP Fund had a Funded Percentage of 107.5%. As a result of a decline in stock values, real estate and other investments the Funded Percentage had dropped to 62.6%, by April 1, 2009. The Plan’s assets on an actuarial basis declined in value by nearly $900 million dollars during this same time, creating a projected shortfall so severe that Federal law requires the Trustees of the Pension Fund to take action to ensure the ongoing health of the Fund.
The Employee Retirement Income Security Act of 1974 (ERISA) is the longstanding federal law that sets minimum standards for pension and health plans in private industry to provide protection for individuals in these plans. The Trustees of our Pension Fund are required to management it prudently as required by ERISA and also in conformance to new rules established under the Pension Protection Act of 2006 (PPA).
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Red Zone and Rehabilitation Plan
The Fund’s actuaries have determined that at the beginning of the next fiscal year (April 1, 2010) the Fund will still be so far below the funding requirements established by law that the AFM-EP Fund is expected to be in the Red Zone or Critical Status as defined in the PPA. The Multiplier Reduction and other changes already implemented in late 2009 were in anticipation of the Fund having Critical Status by April 1 of this year.
Under the PPA, come April 1, if the Pension Plan is officially in the Red Zone as anticipated, the Trustees will be required to develop and implement a “rehabilitation plan” designed to allow the Fund to emerge from Critical Status within 10 years or as soon thereafter as practical.
This “rehabilitation plan” may contain benefit cuts, reductions or other rule changes allowable under the ERISA Act and/or additional modifications or benefit reductions which are now permissible under the PPA. The “rehabilitation plan” may also included additional requirements on employers, including the possibility of surcharges on their ongoing contributions to the Fund. When the “rehabilitation plan” concludes, a Pension Fund is generally prohibited from increasing participant benefits unless it can project nine consecutive years of Green Zone (Healthy) Status.
Many of you asked if a rising Stock Market or positive changes in the general U.S. economy would turn things around at the Fund. Unfortunately, it was also made clear at this meeting, that while a substantial up-tick in investments held by the Fund will be very helpful, it may not be sufficient by itself to get the Fund to a healthy funding position.
Once the “rehabilitation plan” plan is in place, if the economy and Stock Market were to see extraordinary growth, that might shorten the period of time that those constraints would be in effect. The Trustees can’t just wish for that to happen, however. The projected asset growth attached to the “rehabilitation plan” has to be based on sound actuarial assumptions. If the Fund outperforms those expectations for long enough or if Pension law changes in ways which are helpful, the Trustees can respond accordingly.
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Plain Talk
Federal law requires all Pension Funds to provide participants with information and notice about Plan features, funding, benefit changes or changes in the law which may modify the way the Trustees are required or permitted to administer the Fund.  Our Fund has sent out such notices. Nonetheless, concern was expressed by RMA representatives and others at the Las Vegas meeting that those notices have not been sufficiently transparent or understandable to the average layperson.
We are hopeful that many on the dais heard that message.  More information from the Fund which is both timely and easily understandable will allow you (or any financial advisors you might consult) to make appropriate long and short term decisions about your financial future.
It is obviously a matter of great concern to musicians if their decisions about applying (or not) for benefits, retiring from tenured employment, taking new work or making other lifestyle or work changes are being based upon assumptions which might soon change. Since it generally takes 60-90 days to process and initiate retirement benefits for those who may be eligible, receiving notice of a change which will be implemented in 30 or 45 days may leave one little opportunity to take informed action.
RMA cannot and does not offer personal advice to individuals about the Pension Fund.  Recent changes to the AFM-EP Fund can be accessed at the Fund’s website at www.afm-epf.org and we suggest that you read that document and all mailed notices that you receive from the Fund very thoroughly and retain them for future reference.  One way of having a voice is by being as informed as those in charge allow you to be.
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Pension Fund Staff back to top
It was also clear to many of us in Las Vegas, that the Fund’s staff and consultants are deeply committed to the health of the Fund.  They recognize the uncertainty and anxiety that the current situation is creating for all of us.  They are acutely aware that individuals and families are attached to all of this and we are fortunate to have fine people at the Fund working on our behalf.  The Fund’s staff are not the decision makers, however; that is in the hands of the Trustees.
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RMA Helping Out
The Pension Fund has long been a focus of RMA action and we have been active in engaging the Fund. The Fund has responded by improving annual statements, participant service, increasing public outreach and launching a very helpful web-site.
We have also engaged the AFM and together with the other Player Conferences, we have brought legislation to AFM Conventions to improve Trustee Representation.  We have not been so successful there.  Several AFM Conventions have seen the wisdom of those ideas and they have passed various bylaws to broaden representation and make appointments less unilateral.
However, the AFM President has continuously refused to honor those bylaws. The AFM membership’s expectation that three rank and file Trustees would be appointed has never been met.  President Lee has played politics with the Pension Fund in each and every year of his Presidency.
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Politics back to top
We absolutely cannot tag the AFM President with the downturn in the economy; the Fund would have suffered regardless. However, in addition to economic factors, the Fund is now also paying a price in terms of credibility because of the ways in which he has politicized Trustee selections, firings and committee appointments.
Our Pension Fund had already suffered a series of benefit cutbacks and multiplier reductions during the last few years when President Lee decided to remove Hal Espinosa on January 1 of 2009.  Sadly, there is no avoiding the appearance that the removal was little more than political retaliation. The AFM President’s maneuvering ensured that our Pension Fund would face the daunting task of analyzing future funding liabilities and their impact on your Pension without the wisdom and commitment of the AFM’s longest serving and most experienced Trustee.
Currently there are no Local Officers from Nashville, New York, or Los Angeles on the Board of Trustees, even though their 20,000 AFM members are attached to the lion’s share of Employer Contributions. Does that make you feel like your Federation actually cares about you or your pension?
While only a limited number of Locals were in attendance at this meeting, recording musicians should know that the Presidents of  each of those disenfranchised Locals, Dave Pomeroy, Tino Gagliardi and Vince Trombetta, all came to represent their members.
Different Trustees might have reacted in different ways to mitigate some of what has happened, but President Lee’s dishonorable behaviour prevented that possibility. His failure to represent us will impact the way people view the Fund for a long time to come and it devalues the Pension Fund as an organizing tool. Gamesmanship has prevailed where stewardship was required.
It may or may not have made any difference in the long run ─ we can’t ever know. It is clear though, that process and integrity drive credibility, and our Federation has been without both for a very long time. Being focused on personal politics, rather than priorities for musicians is just plain wrong.
Meanwhile we will continue to bring you the best information we can. We all stand united in the hope that the Fund will recover as soon as possible and that AFM Leadership will reform itself and play a positive role in making that happen.
  • Meeting in Las Vegas
  • Funding levels
  • Red Zone and Rehabilitation Plan
  • Plain Talk
  • Pension Fund Staff
  • RMA Helping Out
  • Politics

As you are aware, the Trustees of the Pension Fund (AFM-EP Fund) have reduced the Benefit Multiplier for benefits earned for employment on or after January 1, 2010 to $1 per month per $100 of Employer Contributions (Full Retirement at Age 65) and have imposed other changes as well. Read the rest of this entry »

Videogames and the right to ratify your contract

Voters_125We all know this is a mess and it is not getting any better. While companies earn all-time profits, AFM Video Game employment has nosedived. Sadly, AFM wages for 2008 were half the wages in 2007.  Part of the problem is that the Federation is hiding the ball. There are big headlines in the IM, but even interested Locals can’t get actual numbers from their own International Union.

Read the rest of this entry »