When a writer works under the WGA Minimum Basic Agreement (MBA), in addition to the monies paid to them for their writing services, the employer contributes an additional 8.5% toward the writer’s pension. So, if you were paid $100,000 to write a script, an additional $8,500 was paid to the PWGA Pension Plan on your behalf.
Note: Not all of your compensation qualifies as reportable earnings. Contributions are paid to the PWGA by your employer based on covered writing services, also known as reportable earnings, and are paid up to a project’s ceiling. More information about the rules and exceptions can be found under the pension section.
PWGA Pension Calculation Rules
The writer receives 48.3 cents for every dollar contributed up to 6.5% of the writer’s covered income. In order to vest in the Pension Plan, you must earn a minimum of $5,000 of Covered Earnings in a calendar year for five years or more. You can retire as early as 52 (with a reduction in benefits) or after age 65 (with a greater payout for every month you delay, but generally with a limit of 70 1⁄2 as the maximum age you can wait to begin your pension). The details of how much less you receive for each year you retire early, or conversely how much more you receive if you retire after 65, can be found here.
When you collect your pension, the monies paid to you are determined by the annual benefit multiplier (currently 48.3%). This means that (up to certain limits) for every dollar contributed to your pension, if you retire at age 65, you will receive 48.3 cents annually for the rest of your life. What does this mean practically? Let’s say you earned $100,000 a year over the course of a twenty-year career. For each of those twenty years, $8,500 would be contributed to the Plan and $6,000 would be used to calculate your pension. Multiply that by twenty years and the total is $120,000. 48.3% of that is how much you would receive annually: $57,960. The monies are disbursed on a monthly basis. Thus, under this scenario, you would receive $4,830 per month for your lifetime. It continues to your beneficiary only if you pass away within five years of retirement and only for the remainder of the five years starting on your Retirement Date. If you are married, the law requires you to choose (or not) an option that continues to your spouse for life. If you elect to protect your spouse in this manner, your monthly benefit will be lower to take into account that the pension continues to your spouse’s lifetime.
Pension Distribution Options
There are variations on these figures depending on things like the form in which your benefit is paid. For example, you may elect a form of benefit under which your spouse will receive benefits should you pre-decease him/her, in which case your lifetime payments are adjusted. And if you return to work after your retirement, the additional monies will be added to your pension payout. If you retire early and do not work in the first month of your retirement, and then later return to work under the WGA MBA, you can opt for a second retirement once you turn 65. You will receive a second pension payment which is based on the additional monies earned after the first retirement date. You can even retire after 65, work some more, and receive a larger payout. It is worth noting, that there are limits on how much the pension can pay. More information is here.
Defined Benefit vs. Defined Contribution Plans
What’s so special about a defined benefit pension plan? The chart below illustrates some of the major differences between a defined benefit pension plan and a defined contribution plan. Today, companies tend to prefer a defined contribution plan because it relieves them of many obligations. Under a defined contribution plan (like a 401(k) plan), the individual is responsible for deciding how much to contribute, what investment vehicles to invest in, and how much money to withdraw, or not. Employers provide 401(k) plans or other vehicles, sometimes with matching or partially matching contributions.
Most 401(k) plans don’t provide lifetime benefit payments. That’s an important difference Imagine you are trying to plan for your retirement. You think you have accrued enough savings to see you through to 75 – only you live to 88. In this example, under a defined contribution plan, your old age may have just gotten a lot more challenging. With a defined benefit plan, the payments continue until you die (and depending on the form of the benefit you choose, until a surviving spouse dies).
Another problem with defined contribution plans is that they can be profoundly affected by short-term financial considerations. Imagine you’ve saved diligently, made adequate investments to see you though your old age, only the stock market goes down significantly as it did in 2008 (or like it did in 1987, 1929, etcetera). Defined benefit plans can weather fluctuations in the stock market – for many years if necessary. Under a defined benefit generally you are entitled to the benefit you’ve already earned regardless of whether the stock market has a bad year or two. On the other hand, if you’re working under a defined contribution plan you are vulnerable to the vicissitudes of the markets, depending on how you decided to invest your money.
As important as individual responsibility is to all our lives, most studies agree that defined contribution plans result in far worse results than defined benefit plans. In defined contribution plans, workers withdraw monies early, often when they switch jobs, or when the markets are doing badly – resulting in significant negative consequences come retirement time. In addition, they don’t contribute as much as needed for a successful retirement; defined benefit plans contribute consistently, and usually in much higher amounts.
In addition to the normal advantages of a defined benefit pension plan, the Writer’s Guild pension plan is extremely generous. It allows you to retire as early as 52 (with reduced monthly sums because you are getting paid for a longer period). It increases pension payments if you work after you first retire (by what the PWGA calls a 2nd retirement). It provides a host of options so that you can protect your spouse should you predecease him/her.
Comparing Retirement Options
How does the defined benefit model compare against a defined contribution model?
| Defined Benefit (DB) | Defined Contribution (DC) | The DB Advantage | |
|---|---|---|---|
| Philosophy | To provide participants with lifetime retirement income. |
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The security of regular monthly income rather than savings. |
| Contributions |
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| Investment Decisions | Professionals manage the investments based on general investment. | Individuals decide how their money is invested, usually based on a range of available investment options. | With a DB plan, participants don’t have to worry about making investment decisions, diversifying investments, or tracking investments because the Plan, using investment professionals, is doing it for them. |
| Ancillary Benefits | Additional benefits such as:
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At retirement, individuals may be able to buy a lifetime annuity that includes some additional benefits such as inflation protection — but these extras tend to be expensive, which reduces the amount they’ll have available to provide an income stream. | With a DB plan, the additional benefits are built in and members don’t have to worry about the additional cost of shopping around for an annuity that includes them. |
A Few Final Thoughts About Your Pension
You can help ensure you get all the contributions owed to your pension plan by employers by supplying the PWGA with a copy of your contract whenever you begin a new job. If monies are owed, the PWGA will pursue them on your behalf. You can send a copy of your contract to:
Mail: 2900 W Alameda Ave, Suite 1100 Burbank, CA 91505
Fax: (818) 526-3190
Email: Send an email to the Eligibility Department at [email protected]. In the subject line type SECURE LINK, for the message type, Participant Registration Form; we will respond to your email with a Zix secure email. You must register, then you may upload your form and email it back to our office.
As you get closer to retirement age, or are considering retiring early, make an appointment to see any member of the Pension Benefits Department to better understand your options. You are welcome to bring along a financial advisor to help you with your deliberations. The bottom line here is that the PWGA Pension Plan provides valuable benefits that are mostly unavailable to many other workers.