A CLOSER LOOK AT OUR PENSION AND AFTRA’S PENSION
Updated: Oct 22, 2018
There has been a lot of chatter that the AFM-Employers Pension Fund (EPF) performs “far worse” than its “peers.” The American Federation of Television and Radio Artists (AFTRA) Retirement Fund has been cited as a “peer” that “bounced back” after the 2008 meltdown while AFM-EPF didn’t. We’ve heard the AFM-EPF spends “far more” than AFTRA and “performs far worse.”
Let’s take a closer look at these claims
Here’s the quick and dirty:
-AFTRA has 7,000 to 10,000 fewer participants and AFTRA makes it much harder to qualify for pension benefits. To be considered a participant in the AFTRA pension you need $15,000 earnings in a year vs. $3,000 earnings for the EPF.
-The employer contributions to AFTRA are 53-86% higher than the EPF because there is a lot more royalty and re-use income for AFTRA television performers than for AFM members. In 2015 the EPF took in $62 million from employers. AFTRA took in $117 million. We’re talking a difference of tens of millions of dollars.
-Annual benefit payouts are higher for AFTRA but because its employer income is so high it loses 62-77% less each year than the EPF. Again, tens of millions of dollars difference. The higher employer income is why AFTRA has more money than the EPF and why it is losing money more slowly, though it is still losing.
-AFTRA spent a range of $8-11 million on investment fees from 2009-2015. The EPF spent about the same, $9-11 million. Investment performance has been similar: 9.3% average net gain 2009-2016 for the EPF and 8.1% net for AFTRA in the same period, so the reason AFTRA is in better shape is not because of investment performance. We are also talking about a fraction of a percentage point of both funds’ value in these fees.
-AFTRA spends $7-8 million on administration. The EPF spends $14-15 million. Again, we are talking about the difference between 4.9 and 9 tenths of a percentage point of total assets.
Why the difference in administrative costs between the two?
-AFTRA shares some of its fixed admin costs with the AFTRA health fund, bringing down its running costs. The EPF has no such partner.
-AFTRA as of 2015 has 1,964 employers and 385 CBAs. The EPF has 5,572 employers and 3,755 CBAs making the workload much heavier at the EPF.
People say numbers don’t lie. They don’t. But when you report numbers and data, you can choose to report only the data you prefer, particularly if you have a political goal. It’s our job as readers to make sure we are not led around by the nose and we should examine data folks use to support a narrative, particularly if it’s a narrative that seeks to take someone down.
And if you can’t examine the data, at least be skeptical and don’t accept one source’s word for it.
Back to AFTRA: It is not all that healthy. It has negative cash flow and more inactive than active participants. It also has greater liability than assets. So while it’s “green,” it’s not exactly healthy. It also has a radically different structure for benefit accrual and calculation from the EPF, to the point where calling it a peer is like saying apples and chainsaws are peers.
Sources: IRS 5500 forms from AFTRA and the EPF for the years 2009-2015 and the Summary Plan Descriptions of both plans .