PHILADELPHIA, Oct. 12, 2011 /PRNewswire/ -- The American Federation of Musicians and Employers Pension Fund (the "Fund") said today that 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.
"The Philadelphia Orchestra Association has taken advantage of the legal process and arranged its finances in a way that damages the pension benefits of musicians across the country," said Raymond Hair, co-chair of the Fund, and President of the American Federation of Musicians. "From the outset, the Association has distorted aspects of its financial condition so that it could eliminate its obligations to pay for pension benefits that were already earned."
In response to the news that the Philadelphia Orchestra Association reached a new collective bargaining agreement that allows it to withdraw from the Fund, a $1.7 billion non-profit organization that provides needed pensions to approximately 50,000 musicians across America, Mr. Hair said that the Association's leaders had presented a skewed version of its true financial condition to their own employees, their donors and the Bankruptcy Court.
Alan Raphael, co-chair of the Fund, said that 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.
"We're going to do everything that we possibly can to make sure that what we believe to be the true financial condition of the Orchestra is revealed," said Mr. Raphael.
Mr. Raphael also said the Association's agreement could deprive the Fund and its beneficiaries of up to $35 million – to the detriment of musicians across the country and their employers who have lived up to their responsibilities.
The Philadelphia Orchestra Association, which filed for bankruptcy in April, 2011, is sitting on a $120 million endowment that it claims it cannot use to pay operating expenses. The endowment is more than sufficient to ensure the long-term viability of the Orchestra and fully fund pension obligations for many years to come, including its contribution obligations to the Fund.
The Fund has already begun investigating certain donations to determine whether, contrary to the Association's representations, they can be used to support the orchestra.
In fact, as further evidence that the Association is attempting to make its financial situation appear more dire than it actually is, the Fund has already received information from at least one donor indicating that its $2 million donation was mischaracterized by the Association. The Fund believes that other donations may have been mischaracterized as well.
SOURCE American Federation of Musicians and Employers Pension Fund