Benefits April 25, 2012

Settlement Clears Orchestra to Withdraw from Pension Fund

April 25, 2012 (PLANSPONSOR.com) - The Philadelphia Orchestra Association settled with a national musicians' pension fund that had threatened litigation over the orchestra's withdrawal.
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The American Federation of Musicians and Employers’ Pension Fund (AFM-EPF), which had filed a $35 million claim in the case, will drop all its legal challenges in exchange for $1.75 million from the orchestra, according to The Philadelphia Inquirer. The settlement allows the orchestra to move forward with an uncontested reorganization plan and possibly emerge from bankruptcy within 90 days.

In October, a new collective bargaining agreement was reached between the orchestra association and its musicians union which called for cutting salaries and moving musicians’ pensions to a defined contribution plan from the current defined benefit plan (see “Pension Fund to Sue over Philly Orchestra’s New CBA”).  

However, the AFM-EPF said the agreement was the culmination of a strategy to avoid the orchestra’s obligation to pay the fund contributions of up to $35 million it owed for benefits earned by its musicians.

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