We are long-time AFM members with an interest and background in finance and math. Our only agenda is to try to bring our pension fund back to a usable state for all members, of all generations. We are concerned that if the Fund continues in its present course, those of you who are now fifty may receive only a few years of a (possibly reduced) pension. If you are forty-five or younger you may receive nothing at all.

This is not inevitable and we think there is a good chance our fund can be saved. To do this, we think it’s important to understand how pension funds work. If you are allergic to numbers or finance, but have had a savings account or taken out a loan, you will be able to understand the basics of a pension plan. There are many different versions of how we got into this mess. In particular, we find the the Trustees’ version inexplicably incomplete. Our version has the advantage of being consistent with the views of pension experts and unfolds naturally as we explain how pensions work in Part 1.

Since our story differs from the Trustees version in numerous ways, we realize it might be controversial. To remove any doubt you may have that our comments are within the mainstream of financial thought and not some crazy theory, we invited the highly respected pension authorities M. Barton Waring and Ronald J. Ryan to review our work. Their complete comments to us follow this introduction. We are grateful for their time and efforts.

Talking about things without knowing much about them is a good way to generate a lot of heat without generating any illumination. We think there’s been a lot of that going on and we hope this will help fix that. Along the way, we also talk about ways to evaluate pension fund investment performance, the serious issue of our shrinking pension ’nest-egg’, and some possible ways that we can all work together to fix the fund.

Moving forward looks like it will require the efforts of many members. If you are a member of an orchestra committee or other influential group, we hope you will try to do something to get your colleagues to help bring our pension back to a healthy status. We advise you not to wait for an initiative from the AFM, which may or may not arrive.

You can find a copy of this document in PDF format or HTML, along with other pension articles of interest on our website: AFM Pension Perspectives.

While we wrote this for our colleagues in the AFM, what you are about to read applies to every defined-benefit plan in America, both public and all flavors of private. The magnitude of the problem is currently measured in the trillions of dollars and climbing. As a result, not only do we hope you find this document useful, we hope you will share it. And we hope you will share it not only with your fellow AFM members, but with anyone who is a participant in a defined-benefit pension plan.

In Solidarity,
Scott & Tom
August 8, 2017