Jump to Navigation
Jump to Content

Pension Rights Center Comments Urge Treasury Department to Flunk Musician’s Fund Application to Cut Retirees’ Pensions

For Immediate ReleaseContact: Karen Friedman, 202-296-3777
March 02, 2020www.pensionrights.org

The Pension Rights Center (PRC) filed comments today on behalf of a group of retired musicians who will “forever lose 40 percent of their hard-earned pensions” if the U.S. Department of the Treasury approves a proposed cutback scheme filed by the Trustees of the American Federation of Musicians and Employers’ Pension Fund (AFM – EPF). The Pension Rights Center urged the Treasury Department to deny the Application or allow the Trustees to withdraw the Application, giving them a chance to remedy the flaws affecting this group of retirees. The Center is a 44-year-old nonprofit consumer organization that works to protect and promote the retirement security of workers, retirees and their families.

The comments were written by Terrence Deneen, a Fellow at the Pension Rights Center, on behalf of 14 retired musicians – professional violinists, pianists, drummers, guitarists and composers, among others – who are facing financial peril if their pensions are slashed. These musicians requested that PRC write on their behalf to challenge the legality of the Pension Fund’s application under the Multiemployer Pension Reform Act (MPRA). They are representative of a group of 180 retirees who have been unfairly targeted for 40 percent cuts. Other retirees signing on to the comments are part of a larger group of 800 retirees who stand to lose 20-40 percent of their pensions. Deneen, a retired attorney with more than four decades of pension experience, formerly served as the Chief Insurance Program Officer of the Pension Benefit Guaranty Corporation and Senior Advisor at Palisades Capital Investors.

The comments assert that the AFM-EPF proposal does not comply with the MPRA requirement that the reductions be spread fairly and as evenly as possible over the entire population of eligible plan participants. Instead, the Trustees singled out a class of retirees who had taken partially subsidized early retirement benefits and targeted them with an outsized share of benefit cuts. The comments note that “[t]here are 50,000 participants in the Plan, and about 29,000 of them were at risk for benefit cuts. The group of 180 “40 percent targets” is a mere .035 percent of plan participants, and less than one half of one percent of the at-risk group, but this group was arbitrarily saddled with 10 to 15 percent of the total benefit cuts.”

Steve Nathan, a 68-year-old pianist from Nashville, Tennessee, who played with iconic bands and singers such as the Beach Boys, Etta James and Lionel Richie told the Center that “this is a hardship, but also an injustice." We gave up wages to pay into the pension fund and were enticed to retire early with a guaranteed pension and now 182 of us, in our 60s and 70s are getting punished by the pension fund for having had successful careers. We may have been hit makers in our early days, but this is a youth-oriented business, not inclined to hire musicians our age. We did everything right, everything that was asked of us, and now we’re forced to pay for the mistakes the Fund made – not us.”

PRC’s comments further urge Treasury “to give close and skeptical scrutiny to the Trustee’s assertion that there are no practical steps that can be taken to increase contribution income,” which wouldn’t solve the AFM plan’s fiscal problems but could be helpful  reducing the size of the cuts to the musicians.   Additionally, PRC contends that the Fund trustees fails to show that the trustees took all reasonable measures to prevent the plan from running out of money. Among other things, they failed in their duty to restrain administrative costs. They also have not shown that their scheme is feasible. The application does not demonstrate that implementing the cuts will ensure that the Fund will survive for 30 years, a MPRA requirement.

The Pension Rights Center is committed to the preservation of multiemployer pension plans but has long been critical of the cutback provisions in MPRA, a law designed in a backroom deal, and slipped into a year-end spending bill in 2014, that allows certain underfunded multiemployer pension plans to cut retirees’ hard-earned pensions in order to balance the books of the these plans. PRC’s Executive Vice President, Karen Friedman, calls “MPRA an unprecedented breach of the federal private pension law, ERISA, and a betrayal of promises to workers and retirees.” She notes that the Pension Rights supports the Butch Lewis Act passed by the House in 2019 but is also open to supporting the right legislative compromise if it will preserve the musicians’ and other financially-troubled pension plans, and prot*ect workers’ and retirees’ pensions.

print