The American Federation of Musicians and Employers’ Pension Fund (AFM-EPF) is the country’s largest musician’s union — one that represents 80,000 professionals in North America, including members of the Louisville Orchestra.
Last week, the AFM-EPF announced the organization is nearing “critical and declining” status; this means the fund is projected to run out of money to pay benefits — becoming insolvent — within 20 years.
In a statement posted on their website, AFM-EPF leaders wrote: “There is no practical way that investment returns and contribution increases alone will be able to close the long-term, worsening gap between the money coming in and going out.”
As of March 2019, the fund had roughly $1.8 billion in assets, but $3 billion in liabilities.
Given the current financial state of the fund, organization trustees identified two paths forward.
They could either allow the fund to run out of money, or apply to the U.S. Department of the Treasury for approval to reduce benefits under the Multiemployer Pension Reform Act of 2014.
“Although reducing benefits will be painful, the Trustees have decided to seek permission to do so because running out of money would leave all participants with virtually no benefits in the future,” AFM-EPF leaders said in their statement.
If the fund receives permission from the Treasury Department, benefit reductions for musicians will not take place immediately. Cuts would begin late 2020 or early 2021.
Additionally, the AFM-EPF is petitioning Congress for financial assistance.
In the meantime, performers face tremendous uncertainty.
Louisville Orchestra leadership would not comment on the how benefit reductions could impact their performers.
Kim Tichenor, who is co-chair of the Louisville Orchestra Musicians Committee, said until there is a specific plan for restructuring, she couldn’t offer any predictions yet on how the benefit reductions would affect performers.
But Tichenor said one thing is certain.
“Without a restructuring of the pension plan, it will not exist for future generations of AFM musicians,” Tichenor said.
The Louisville Orchestra and the AFM-EPF have a longstanding relationship. When the Louisville Orchestra filed Chapter 11 bankruptcy in 2010, the fund was the orchestra’s largest creditor; according to the filing, they owed the pension fund $43,486 at the time.