This morning I attended a seminar on "Target Date Retirement Funds," (which, if you don't know, are investment instruments designed for working stiffs saving for retirement. They are most often found in 401(k) Plans.)
The Animation Guild has a full roster of Vanguard Target Date Retirement funds in its own plan, but the question has come up:
"What about the Individual Account Plan in the Motion Picture Industry Pension and Health Plan? How much money can animation employees find in there?
Below, a few answers ...
1) The total value of Individual Account Plan (IAP) assets, minus liabilities, totaled $2,299,532,364 at the start of 2010.
2) There were 70,964 participants.
3) The IAP had total income of $446,158,451.
TAG employers now pay contributions into the IAP that total 6% of minimum weekly contract rates, plus 30.5 cents for every hour worked.
Without going into a long list of Animation Guild minimums, the above rates mean that most employees who work for a year will see between $4800 and $5500 flow into their Individual Account Plan between January 1 and December 31.
IAP assets have grown at an 8% to 9% clip over the past twenty years. Assets are invested conservatively, with the plurality of the money in bonds, and the balance in stock, real estate and "alternative investments."
A couple dozen investment managers orchestate plan investments under the direction of Plan trustees. (Evenly divided, per Senators Taft and Hartley, between our fine, entertainment conglomerates and participating unions.)
Anecdotally, I can tell you that a bunch of TAG members have between $300,000 and $500,000 in the combined IAP and TAG 401(k) Plans.
(You can find additional info about Motion Picture Industry pensions at this earlier TAG blog post.)
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There was a posting in the "I ... am VFX Soldier" thread over a week ago about a co-worker who didn't see any personal benefit in going union. I'm paraphrasing, sorry if anything was taking out of context.
Having $300,000 to $500,000 put away for you without a penny out of pocket sounds like a pretty good benefit to me. Not to mention the defined benefit pension plan, access to a 401k, health benefits, partial reimbursement of tuition for qualified courses related to our industry, etc.
If media CEO's can make tens of millions in bonuses in ONE year, the least they could do is share a couple hundred thousand dollars with the people who create their products after DECADES of service.
Having $300,000 to $500,000 put away for you without a penny out of pocket sounds like a pretty good benefit to me. Not to mention the defined benefit pension plan, access to a 401k, health benefits, partial reimbursement of tuition for qualified courses related to our industry, etc.
I agree with you completely, but the $300,000-$500,000 figure Steve quoted includes what members have saved for themselves using their 401(k) benefits:
Anecdotally, I can tell you that a bunch of TAG members have between $300,000 and $500,000 in the combined IAP and TAG 401(k) Plans.
I know members who have $200,000 in the IAP plan. Nobody, to my knowledge, has half a million.
For that it takes maximum use of the 401(k) Plan.
I posted a copy of my IAP on my blog:
http://vfxsoldier.wordpress.com/2010/06/16/to-organize-or-not-to-organize/
I'll post my latest statement when I get a chance but after only being in tag for 2 years my IAP is worth almost $17,000.
On top of that, the 18 months of free health insurance coverage after I left was great too.
There was a posting in the "I ... am VFX Soldier" thread over a week ago about a co-worker who didn't see any personal benefit in going union.
I have another co-worker who has nothing against unions, but he has no complaints about his current VFX job and does not see where he'd benefit from going union. He has no health insurance or retirement benefits, but he makes a good salary and pays for his own health coverage out-of-pocket. He doesn't want to chase the VFX work out of town by unionizing the local VFX industry.
Here's the fun bit. Because he has no retirement benefits, he knows that it's up to him to save for retirement. For years he has faithfully contributed the maximum allowed to his Roth IRA. However, last year he earned too much and cannot contribute to a Roth IRA for 2011.
He knows nothing about taxable investing or the difference between his Roth IRA and the investment choices within that Roth IRA. He's also risk-adverse, and he's reluctant to invest in anything that would "lose money." He has trouble learning how to invest on his own because he's much more of an artist than a reader. He'd have a difficult time reading any book from start to finish, much less The Boglehead's Guide to Investing.
For him, an IAP would be perfect, because it would be money automatically set aside for him and invested for his future. He wouldn't have to think about it. He'd just have the cash waiting for him when he retired. The same goes for the defined-benefit plan. It's a good setup for artists who have trouble investing.
Steve, to qualify to receive the IAP funds, one has to be in the union for a certain number of years to become "vested". Correct?
To be vested in the IAP, you need to work ten forty-hour weeks (a total of four hundred hours) in one calendar year.
To be vested in the Defined Benefit Plan, you need to work five qualified pension years.
(A "qualified pension year?" That's 400 hours worked in a calendar year.)
He knows nothing about taxable investing ...
Not hard to learn. Here's a handy page of excellent portfolios that are easy to assemble:
http://www.bogleheads.org/wiki/Lazy_Portfolios#Core_four_portfolios
And here's a quick tutorial on where investments should be placed to maximize tax efficiency.
http://www.bogleheads.org/wiki/Principles_of_Tax-Efficient_Fund_Placement
The dirty little secret about savvy investing? It's simple.
What's hard is sticking with it and not freaking out when investments go south. (And investments will go south. Everything does. And that's the time to buy more ... but few people do. Mostly they bail.)
What's hard is sticking with it and not freaking out when investments go south. (And investments will go south. Everything does. And that's the time to buy more ... but few people do. Mostly they bail.)
That's his problem, though. He doesn't want to risk "losing" money in any investment.
I guess I could tell him to not look at his portfolio more than once a year...
That's great advice for retirement funds. Your tolerance for risk in the short term is what helps you make gains in the long run. Look at long term trends in the major indices, like S&P 500; then add in the value of dollar-cost averaging (making equal dollar contributions means you buy more when it's low; a little short-term volatility actually helps you get better value!)
And if you're having trouble contributing to a Roth IRA, ask your tax guy about making a regular (after tax) IRA contribution and then recharacterizing it as a Roth contribution. Silly as it sounds, it's legal.
Can anybody explain to me if the Motion Picture Screen Cartoonist pension plan is the same than Animation Guild 401K, or are different.
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