AFM-EPF Avoids Critical and Declining Status but Trustees Still Have No Plan for the Future

The board of trustees of the AFM-EPF met this past week and decided to keep our pension plan out of critical and declining status for another fiscal year. That means we are spared the 25-30% cuts they have been planning since 2015. But the fact remains that, as our trustees stated in January of this year, our plan is “on the brink of entering critical and declining status in the near future.” The only thing saving us is that last year was one of the best years the US stock market has ever seen. No one is counting on that lucky circumstance again.  
 
To emphasize the point, the trustees remind us that they will use the next year to “continue to prepare for the possibility of critical and declining status by analyzing different ways that benefit reductions could be implemented fairly if they become necessary.” The trustees have already made extensive preparations for cuts to our pensions. They have even had a series of discussions with the staff of the U.S. Treasury about the best way to frame their cut application.
 
So, it rings hollow when the trustees tell us that: “We continue to take the steps we can to protect your hard earned pension benefits and improve the health of our fund.” The only steps they are taking is to prepare for cuts. As we have said before, a cut is not a plan. And hoping for another great year in the stock market is no way to manage a pension fund.
 
Since December of 2016, when the trustees first told plan participants about the possibility of cuts, we have been held in suspense, waiting for a plan from the trustees. Unfortunately, our trustees have no plan and make no attempt to get control of the situation. They are taking the easy way out by pursuing cuts to our benefits.
 
Our trustees must view this coming year as an opportunity to take proactive steps to stabilize the AFM-EPF. This should include adopting the multi-faceted MPS Action Planwhich was introduced on April 4th at our national meeting. Many aspects of the MPS Action Plan are easy to implement immediately and will lead to greater accountability and oversight at our pension fund.
 
One simple but critical change that could happen immediately is board reform. We think that our trustees should have financial, investment and actuarial expertise. Five of the current eight AFM trustees should be replaced by new board members with these skill sets. This would be the first step towards a meaningful plan for the long-term future of our pension fund.
 
Unfortunately, the facts about our current trustees’ performance to date are not changed by avoiding critical and declining status for another year: 
 
•    They have produced the worst investment returns in their peer group of large pension plans.
•    They have the highest expenses of any fund in the entertainment industry. 
•    They have not been able to raise employer contributions even to the rate of wage inflation.      
 
The root problem with the AFM-EPF is bad governance and this year presents a chance for our trustees to stick to their word and take all necessary steps to protect our hard-earned pension benefits. Board reform is the first step. We can no longer accept the results produced by an entrenched, unaccountable and unqualified board. If this is permitted to continue, so will the mismanagement of our pension plan. Since December 2016, musicians across the country have been in a constant state of uncertainty about the possibility of cuts to their benefits. One important way to improve our situation immediately is to bring onto the board highly skilled, dynamic and accountable trustees who are experts, particularly in the investment and actuarial fields. For hard-working musicians, this is the kind of board of trustees we need and deserve.