How Does My WGA Pension Work?
“Retirement is not in my vocabulary. They aren’t going to get rid of me that easily.”
- RUSH HOUR 3 written by Jeff Nathanson, directed by Brett Ratner
(5 mins)
Screenwriters and directors often confess to me that they don’t know how their pensions operate. Mainly, they don’t know when or how they can access their money. Some aren’t sure if they even HAVE any money. The WGA and the DGA Pension Plans are incredibly important to your wellbeing later in life. You don’t have a 401(k) through these guilds, so having guaranteed income when you’re in your 70s, 80s, and beyond can be life-saving. I want to share a few of the basics in regards to the WGA Pension Plan. Some of what is discussed below applies to the DGA and non-Entertainment Industry pensions as well.
It’s important to know that this is not the full extent of the Pension Plan. There are plenty of nuances that I can’t cover here. As the Board of Directors states in their letter to participants, “No general explanation can provide all the details of the Plan.” So please conduct further research by visiting their website HERE, reviewing the full Plan document HERE, or contacting the Pension & Health Plans office at 818-846-1015.
CB YAY!
Let’s start with how your future income (pension) is funded. Your benefits are determined by how much your Employer, usually the studio, has contributed to the Plan on your behalf. You are not contributing to your pension like one would do with a 401(k). Pensions are different.
When you’re working under a contract that’s covered under the Collective Bargaining Agreement (CBA), the more money you earn, the bigger your pension. Generally, your writing services are considered covered earnings under the CBA. However this does not include residuals, royalties, options, program fees, or character payments. It does include rewrites and polishes. There is a small catch. Federal laws prohibit pension contributions, as well as pension payouts, from being too high. Basically, there’s a cap on how much your pension can pay you.
SEE MY VEST
You will be fully vested (A.K.A. your pension benefits are guaranteed) once you have accrued five Qualified Years. A Qualified Year is one in which you have earned at least eight Credited Weeks of employment. That doesn’t seem so hard, but we all know that you could easily be out of work for over a year. So get this: if you earn $5,000 of gross compensation, that equates to eight weeks.
You can begin taking your pension benefits as early as age 52, also known as Early Retirement Date, or as late as the Required Beginning Date of age 70 ½. Why would you wait? The amount of money you’ll receive generally increases with each passing month you wait.
What if you want to receive your pension but continue writing? You can do that too! There are options for that situation. Most writers can’t imagine “retiring” from writing. It doesn’t even make sense. What are you going to do, stop being creative? Try not to think of retiring as no longer doing the thing you love. You can have it both ways.
GETTING PAID
Once you choose the way in which you want to get paid, there’s no going back. You’re locked in. I highly recommend seeking a professional to help make this important decision.
Joint and 50% Survivor - You will receive a monthly pension for the rest of your life. I you pass away before your spouse, then your spouse would receive 50% of your monthly benefits for the rest of their life too. This also means your monthly benefits would be reduced and you will not receive as much as you would if you choose a Period Certain Life option. You can also opt for 66 ⅔%, 75%, or 100% Survivor. Again, the monthly amounts get reduced appropriately.
In the above option, you can also choose a Survivor (beneficiary) who is not a spouse. However, if this beneficiary is much younger, then 50% may be your only option.
10-Year Certain and Life - You will receive a monthly pension for the rest of your life. However, if you were to pass away within 10 years, then a named beneficiary will continue to receive those payments until the 10 years is up. You can also opt for a Five-Year Certain and Life. Keep in mind, the beneficiary does not have to be a spouse under this option.
Pop-up Option - This is available with the Joint and Survivor options. If your named beneficiary were to pass away before you, then your monthly benefit would increase.
Social Security Adjustment Benefit - This option is available if you retire early and would like to receive your pension before your Social Security benefits begin. You will receive a larger monthly pension until age 62 or 65 (you get to pick). After that date, your monthly amounts will be reduced or, in some cases, outright terminated. The idea behind this is to cover the gap in between the time you retire and the time you begin receiving Social Security.
Lump Sum - You’ve probably heard of this. You get one, fat check in the amount of your full pension. One of the biggest factors to consider with this option is the tax hit. You’ll be taxed on this amount, just as you’ll be taxed with the other payment options.
FINAL SCENE
You can request a pension estimate once a year. Be sure to check for accuracy since this amount is based on your past earnings. If you were to pass away before retirement, then your beneficiary will receive a Death Benefit. It’s just as important to double-check your beneficiary, especially if you’re divorced.
The WGA Pension Plan exists for many different reasons. Perhaps you do want to retire early and no longer write for a living. Maybe you’re unable, or unwilling, to land another gig or sell another script. Having extra monthly income can help you survive, and thrive, later in life. After all, you deserve it!
If you’d like more information about pensions, you can schedule a complimentary meeting HERE.
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