Musicians Union Members Want to Know Why They Face Pension Cuts

“Somebody whose whole life is about playing music has a certain lack of awareness,” says Steve Nathan, a 66-year-old career session musician. He affects his best musician voice: “ ‘Oh, I guess that’s a problem,’ ” he says, dreamily, “ ‘but where do I plug in the guitar? I just want to play.’ ”

Nathan, seated outside at Barista Parlor in the Gulch, is unassuming. He’s wiry with white hair brushed back from his forehead and a bushy white goatee on his narrow face, and any years of excess are far behind him. He’s a vegetarian now, and he counts steps with a Fitbit on his left wrist to secure a discount on his health insurance. (He’s at 6,000 when we meet for coffee at noon on Sunday.) While he still books sessions from time to time — he’s played keyboard on recordings by Chris Martin, Cyndi Lauper and B.B. King, as well as country stars Keith Urban, Carrie Underwood and George Strait — the onetime Muscle Shoals fixture says his days of hustling for gigs are behind him. At age 55, he opted to start drawing a pension from his union, the American Federation of Musicians.

But while Nathan was ready to enjoy the slow pace of his autumn years, something has ended up keeping him busy. As a result of what the fund claims were hits taken in the dot-com bust of the early 2000s as well as the 2008 financial crisis, the American Federation of Musicians and Employers’ Pension Fund has, since 2010, described its status as “critical.” Nathan, like others, initially figured, sure, everybody took a hit. But things would rebound.

It wasn’t until November 2016, after the AFM-EPF board of trustees announced that pensions could be cut, that members’ general concern turned acute. In that month’s newsletter, the board suggested that due to the pension’s continued critical status, those depending on pensions should adopt “a comprehensive retirement strategy that includes a personal savings component to supplement.” In short: The fund itself could not be depended upon, and so members should look for other ways to provide for their retirement years — ominous advice for those who are already drawing benefits, some 50,000 according to estimates by the watchdog group Musicians for Pension Security.

“We want more information about the state of the pension,” says Musicians for Pension Security founder Adam Krauthamer, who started the organization last year, following the fund’s announcement. “We want more transparency. We want more accountability. And we want our trustees to work with plan participants. One would think that makes sense. It’s our money.”

One of his group’s first actions, Krauthamer says, was to dig into AFM-EPF financial records, where they discovered some alarming statistics. He says the fund had lost between $800 million and $1 billion in funds in an 18-month period, and while trustees set an annual return goal of 7.5 percent, in actuality the results were 3.2 percent. During this time, managers received yearly raises, with one receiving a combined increase in benefits and salary of 28 percent, all while maintaining an office in New York City, home of some of the most expensive real estate in the world. 

Multiple interview requests to the AFM-EPF were not returned.

How does such a failure in performance continue year after year? Hamilton Nolan, a New York-based writer for Gizmodo and longtime critic of Wall Street excess, says such situations arise because of a combination of salesmanship on the part of those who run the fund and ignorance on the part of the union leadership charged with monitoring it.

Says Nolan: “It’s psychologically easier for a pension fund manager to say, ‘We went out and hired this incredible professional to invest your money,’ instead of just being like, ‘Well, we put it in an index fund and we’re going to just take whatever the market gives us.’ ”

This lack of accountability breeds a situation like this, where managers continue to justify their own raises despite less-than-promised results, he says.

“The big objection, I think, is the manager gets rich no matter what,” Nolan says, “and the clients may or may not get rich, depending on how well it does.”

In Nashville, local union leadership set a closed-door meeting for its members on Monday at its hall on Music Row. A maximum of 80 members would be allowed inside, and only one pre-submitted question from each would be accepted, with no guarantee of it being answered. It’s just the latest in a growing acrimonious relationship between rank-and-file members and leadership, according to Nathan. Details of the meeting were not available by press time.

“They’ve made me this deal,” Nathan says. “’If you join our union and pay these dues, we will save money for you so that when you reach an age where you can’t work anymore, we’ll give you that money.’ And now I’ve gotten to that point, and they’re coming around, going, ‘Gee, Steve, we’re really sorry, but it looks like we might not be able to give you your money after all.’ That’s just fundamentally unfair.”

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