Dear Plan Participants,
By now, many of you received an email from the AFM-EPF stating that our fund earned better-than-expected returns in 2016, and we will not be entering critical and declining status for the next fiscal year (read that email here). Avoiding critical and declining status means that our trustees will not be able to file an application to the U.S. Treasury to cut our hard-earned pension benefits. Under the law, the cuts could be up to 70% of accrued benefits (use this calculating tool to see the maximum reduction you could face).
We are not out of the woods, however, and far from it. Our fund could very well enter critical and declining status this time next year. In the meantime, it is important that we participants become as informed as possible as to the inherent problems and solutions. Musicians for Pension Security (MPS) is requesting that the AFM-EPF trustees make decisions with input from the participants, and not be selective about what information they share. They must find a long-term solution that does not cut accrued benefits without the fully informed consent of the workers affected, and they must proceed with complete transparency.
We are aware that certain AFM-EPF trustees actively support MPRA, the law that gives them the right to cut our benefits. This law is controversial as it was passed by Congress in the middle of the night in 2014 without any debate or hearings. Numerous Senators and Congressmen on both sides of the aisle, including Bernie Sanders (D-VT) and Rob Portman (R-OH), believe that MPRA is an unsound law that hurts workers. They want it repealed, or very substantially revised. Policy alternatives exist and have been introduced by members of Congress. These alternative proposals recognize that cutting accrued benefits without the consent of the workers, particularly workers who are near or in retirement, is morally unacceptable.
We are also aware that our crisis follows a decade of bad investment management by the trustees. The ten-year investment return for the fund has been a measly 3.2% net of investment fees, which falls far short of the trustees own investment goal of 7.5%. To make up for the poor performance, the trustees are taking more risks with our investment portfolio. Currently, approximately 32% of Plan assets are allocated to private equity and alternative investments. That is $600 million in notoriously risky, illiquid and opaque ventures. MPS has formally requested the trustees provide more precise disclosure information regarding the fees and net returns of our private equity investments. Participants must judge the true performance and arrive at an informed decision to our prospects going forward.
Many plan participants are unprepared for pension cuts and face dramatic hardships if they are made. Cutting benefits without the consent of the workers is not in the interest of the majority of plan participants. It is something we as a united majority cannot accept. We as Membership must band together, speak up and hold our leaders accountable.
In order to stay informed and work with the AFM-EPF, Musicians for Pension Security has sent a formal request for more plan information to the Fund Administrator. A copy of that information request can be found here.
Members of Musicians for Pension Security
This is a re-print of an email sent to members of the Musicians for Pension Security mailing list. If you would like to join, please sign up here.