National pension fund will oppose Philadelphia Orchestra musicians' contract

Even before details have been revealed on a new labor contract for Philadelphia Orchestra musicians, the national pension fund representing about 50,000 U.S. musicians says it opposes the contract because it ends the Association's participation in the pension fund.

"...in light of the trustees’ responsibility under federal pension law, the Fund currently sees no alternative to litigation to protect the interests of all of its participating musicians, both in Philadelphia and all over the country," said Alan Raphael, co-chair of the American Federation of Musicians and Employers Pension Fund.

In a statement, the Fund said "an agreement reached by the Philadelphia Orchestra Association is the culmination of a strategy to avoid its obligation to pay the Fund contributions of up to $35 million it owes for benefits earned by its musicians."

But the new labor pact and severance from the fund are several steps away from conclusion. The contract must be ratified by musicians; approved the the Philadelphia Orchestra Association board; reviewed and approved by the Pension Benefit Guarantee Corp.; and ruled on by the judge in the Association's bankruptcy case. The Association must also formally initiate its withdrawal from the fund, which it has not done.

The Association declined to comment beyond a prepared statement: 

"The specific terms of the proposed agreement between The Philadelphia Orchestra Association and AFM Local 77 remain sealed and confidential based upon instructions from Chief Judge Stephen Raslavich. The Association fully intends to comply with the restrictions that were put in place until the individual approval and ratification processes –by both the Board of Directors and the Musicians for the Philadelphia Orchestra – have been completed."

The $1.7 billion pension fund has repeatedly said that it will wage a legal fight to recover $23 million to $35 million it says it will be owed if the Association withdraws from the fund. The fund is attempting in court to show that portions of the orchestra's endowment are not restricted, and are therefor available to satisfy the fund's financial claim.

"We’ve found about $20 million that we think is available to us, and we’re going to keep digging until we get to China," said Ray Hair, president of the American Federation of Musicians and a fund trustee. "We’re going to create a deterrent to any other orchestra that tries this. This thing is not going to be over."

Orchestra management is attempting to move musicians to a defined contribution plan from the current defined benefit plans as part of its April 16 bankruptcy petition. The deal now before musicians calls for deep salary cuts, and for the Association to contribute between about eight and 10 and a half percent to musicians' 403b plans, according to a sliding scale pegged to age.

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