The Truth About AFM-EPF Expenses

Musicians for Pension Security has discovered more manipulation of the facts by AFM-EPF Trustees who are trying to spin the truth about the performance of our pension fund. Recently posted to the AFM-EPF website is an updated presentation concerning our fund performance (you can find it here) where the Trustees state that AFM-EPF administrative expenses are “comparatively low” within the peer group. (See slide 22) The peer group consists of five other pension plans, all in the entertainment industry.
Given the Trustees’ spotty record for accuracy in these matters we decided to check it out. Not surprisingly, MPS found the Trustees’ statements to be inaccurate and misleading.
Our analysis found that the administrative costs of AFM-EPF are by far the highest in the peer group. We did this by using a standard measurement for cost efficiency, comparing the administrative expenses to assets under management.  What we found is that the average in the peer group was 0.73% whereas the AFM-EPF is 1.21%.  The AFM-EPF’s expenses are 49.4% higher than the average in the peer group of five other entertainment industry pension funds*.

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We also compared the salary of the highest paid employee in the peer group. As many of you know, Maureen Kilkelly, the Fund Administrator of AFM-EPF since 1997, as of 2015 makes $422,667 per year. The peer group average is $231,346. AFM-EPF Fund Administrator Maureen Kilkelly’s salary is 57.7% higher than the average for the peer group. 

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Clearly, all that extra expense does not produce better performance at the AFM-EPF.  We came to this conclusion by comparing the peer group of five entertainment industry pension plans funded ratios versus funded ratio of the AFM-EPF.  Pension plans track their financial health each year by calculating its funded ratio through a simple formula that divides plan assets by the present value of benefits they must pay to participants. The average funded ratio for the peer group is 89.5%. Ours is 69%.  AFM-EPF Funded Ratio is 25.8% lower than the peer group.

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Finally, we compared net cash flow of the peer group vs. AFM-EPF. We found that each of the five peer funds are strongly cash flow positive, while ours is the only one that is cash flow negative. We are losing $121.2 million per year.

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In last week’s email, we highlighted a statement that President of Local 802 Tino Gagliardi (AFM-EPF Trustee since 2010 and Investment Committee member) made about the state of the pension fund:
“In the eight years since the end of the financial crisis, the Fund’s average annualized return is 9.8% before fees.  That’s good, particularly since, in three of those years, the fund didn’t make its target 7.5% assumed rate of return**.”

Using numbers straight from the Trustee’s own investment reports MPS showed plan participants just how bad the investment performance has been, and how off base President Gagliardi’s assessment is. (See last week’s article here.)

This week MPS again took the Trustees' own numbers, from their updated AFM-EPF presentation, to bring clarity to the issue of expenses and we have come to the same conclusion: They continue to spin the numbers and they are not straight with us. We have to ask again: Where is the accountability?  Where is the transparency? And when are the Trustees going to do something to address the poor performance of this pension fund?  

*Screen Actors Guild (SAG)
International Alliance of Theatrical Stage Employees (IATSE)
Producer-Writers Guild of America Pension Plan (PW)
Directors Guild of America (DG)
American Federation of Television and Radio Artists (AFTRA)
American Federation of Musicians (AFM)

**Read President Gagliardi's full statement here.