That’s An Excellent Question

On 9/17/2012, reader Jonathan Gresl posted a comment to ask if I could write an overview of the differences between defined benefit and defined contribution retirement plans and how they interact with the field. That’s an excellent question and I’m happy to oblige.

question markTo be precise, Jonathan wrote:

I hope, Drew, that you can find time to write something about different retirement systems because this is becoming a large debate in all sectors of the economy. It seems clear to me (as a total non-expert) that whatever risks are involved in defined benefit plans are only increased in a defined contribution one. Since the individual has several large disadvantages as an investor vs. an employer or group of employers.

As it turns out, I wrote a pair of articles back in 2004 addressing those precise issues and even with the distance in time, they are still quite apt:

 What’s particularly fascinating about Part 2 is it was written within the context of the Philadelphia Orchestra labor dispute from 2004. In what some might describe as ironic, the Philadelphia Orchestra Association (POA) was pushing at that time to convert the private defined benefit pension plan over to the AFM-EPF defined benefit plan as a solution to the problem and eventually, the musicians agreed.

Zip ahead to 2011 and the AFM-EPF plan was the very same plan the POA extricated themselves from by way of bankruptcy.

About Drew McManus

"I hear that every time you show up to work with an orchestra, people get fired." Those were the first words out of an executive's mouth after her board chair introduced us. That executive is now a dear colleague and friend but the day that consulting contract began with her orchestra, she was convinced I was a hatchet-man brought in by the board to clean house.

I understand where the trepidation comes from as a great deal of my consulting and technology provider work for arts organizations involves due diligence, separating fact from fiction, interpreting spin, as well as performance review and oversight. So yes, sometimes that work results in one or two individuals "aggressively embracing career change" but far more often than not, it reinforces and clarifies exactly what works and why.

In short, it doesn't matter if you know where all the bodies are buried if you can't keep your own clients out of the ground, and I'm fortunate enough to say that for more than 15 years, I've done exactly that for groups of all budget size from Qatar to Kathmandu.

For fun, I write a daily blog about the orchestra business, provide a platform for arts insiders to speak their mind, keep track of what people in this business get paid, help write a satirical cartoon about orchestra life, hack the arts, and love a good coffee drink.

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