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What About Those Admin Expenses?


Much has been written about the “high” administrative expenses of the AFM-EPF. The fund has been unfavorably compared to other entertainment funds using one measurement: admin costs as a percentage of assets. This might make sense if the fund were an index fund or some other entity whose only job was to sit and accumulate money.


In fact, the work of a multi-employer pension fund is far more complex. The staff has to accept payments from employers, check all the social security numbers, check the employers (who often use multiple names) check the CBAs, check the amounts and make sure the proper credits are applied. Not to mention required periodic notices to be mailed to all participants and thousands of benefit checks to be cut and mailed every month.


That means the more employers, CBAs and participants there are, the higher the workload and the higher the admin expenses.


An analysis of the latest (2016 or 2017) IRS 5500 forms for AFTRA, SAG, IATSE National, DGA (Directors Guild) and the AFM-EPF reveals that the average admin costs as a percentage of assets is 0.71% for all five of those funds, while the AFM-EPF is at 0.88%. But if you look at the average cost per employer and per participant you get a different picture:


Average per employer: $3,798

AFM-EPF: $2,636


Average per participant: $305

AFM-EPF: $299


Much has also been made about the compensation package of the AFM-EPF’s executive director. It has also been implied that she is responsible for the performance of the fund. She is not. She implements the policies of the trustees and oversees the work outlined above. Her complete package is $429,624 while the next highest is the IATSE executive director at $351,492. Once again, if you look at the amount per employer and per participant the IATSE executive director is making 81% of what the AFM-EPF executive director is with only 69% of the employers and 37% of the participants. The SAG and AFTRA plans both share admin costs with other funds and show some of the same employees listed on their 5500 forms which implies they share the cost of those employees. If that is the case, the highest paid employee at SAG is receiving a total package of $432,804 if you combine the numbers shown on SAG and AFTRA’s forms. This is a lot more than most musicians earn. But the kinds of credentials required of a director of a large complicated fund like ours don’t come cheap.


Some might be wondering why there is even an argument about a tiny piece (0.71% or 0.88%) of the value of the fund. Good question.


Perhaps we should be focusing on how to get capital that is not tied to benefits into the fund. The fund will need several hundred million dollars to truly make a difference. This will not be solved by arguing over a few tenths of a percentage point in admin costs or arguing over a few points in investment performance.


Sources: IRS 5500 forms for AFTRA, SAG, IATSE National, DGA and AFM-EPF all from 2016 or 2017.

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