Monday, May 30, 2011

And Again the Pension Thing

Because questions have cropped up on the thread below, let me put up a few factoids about the industry pensions, as well as various pension options.

Here are the benefits now received by TAG members working under TAG/IA contracts.

Motion Picture Industry Pension Plan contributions:

1) IAP employer contributions -- 30.5 cents per hour; PLUS 6% of union minimum rates ($1000-$1600/wk.)

2) Defined Benefit Pension -- Employer contribution of $1.2665 per hour worked.

3) TAG 401(k) Plan: Employee contributions (tax deferred) of $16,500/ yr.; $22,000 per year for participants fifty and above.

The IAP (Individual Account Plan) is a conservatively-invested MPIPP account payable to the participant at the time of retirement.

The Defined Benefit Plan (also a part of the MPIPP) is a monthly annuity paid to the participant at the time of retirement.

The Animation Guild 401(k) Plan is a tax-deferred defined contribution plan. Withdrawals can be made from the account without tax penalties at the age of 59 1/2.

Now. What sorts of accumulations can be achieved over say, twenty-one years? A few examples:

If you were to work twenty-one qualified pension years (400 or more hours in a calendar year makes a qualified year) with a total of 42,000 hours, you would have (ballpark):

$1450 /mnth (Defined Benefit).

$140,000 (IAP)

$360,000 (401(k))

The first figure comes from the Motion Picture Industry Pension Plan's pension chart. The second figure assumes a continuing growth rate of 6-9% in the IAP. (It's been 8.5% over the past twenty years) and a base-line contribution of 21 x $5000. The third figure assumes a nominal increase to $346,500 ($16,500 x 21 = $346,500.)

Obviously, these figures are projections and future events might cause them to be smaller ... or larger. What I can tell you is that there are a number of individuals in the 401(k) Plan who have between $300,000 and $400,000 after sixteen years of 401(k) Plan's existence.

In addition, assuming Social Security remains intact, a retiree could expect from $1800-$2200/mnth at retirement age (now 66-67.)

On top of that, contributions of $5000 could be made to a ROTH IRA account by many animation industry employees. So if you put your shoulder to grindstone and live below your means, you should be able to build up some sort of nest egg over the next quarter century.

Get cracking.


beladona said...

There are not many industries that provide a pension these days, especially in the service industries and including working for the federal gov't [unless you are in Congress, of course.]

Anonymous said...

Another good thing about our pension is that it's multi-employer. So if one company goes belly up, it doesn't have to (and can't) raid our pensions to fund executives' bonuses. ;-)

But seriously, in my opinion the multi-employer aspect is a nice safeguard for our pensions. It's like diversification of your retirement portfolio, no one investment can ruin your entire account. No one employer can ruin our pensions. This is kind of old, but it illustrates my point:

The woman got her pension benefits cut down 80%! (from $2500 to $500/month) At the point of the article, she had 20 years in the company. A new CEO came in to restructure the company for Chapter 11 bankruptcy and reduced other people's benefits but kept his own. He was only with the company for 3 years at the time.

Because multiple companies fund our pensions, we should have to go through what this woman did.... I hope.

Anonymous said...

The funding for the pensions goes into a trust fund. The union studios that are covered by these pensions couldn't raid that trust fund even if they wanted to. That is indeed a tremendous strength of the system.

Anonymous said...

As a VFX artist without benefits, I figure I'd need to save at least $200/week out-of-pocket to match the IAP/DB benefit. This is based on my 50-hour work week and an estimate of the max employer contribution benefit as about $4/hour (if the $1600/week is for a 40-hour work week):

.305 + (0.06*(1600/40)) + 1.2665 = $3.9715/hour

It's not an exact match, because (if I understand correctly) the employer contributions are pretax and tax sheltered, while I would be using posttax dollars in my savings.

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