The New York Backstretch Employees Pension Trust has a bit of a “well-kept secret” shroud to it.Even longtime Thoroughbred owners who compete on the New York Racing Association (NYRA) circuit are sometimes unaware that a pension fund exists for the backstretch workers, and that 2% of the purses at Aqueduct Racetrack, Belmont Park and Saratoga Race Course are invested toward the retirements of the people who provide daily, hands-on care for horses.Despite the under-the-radar nature of the fund, those who oversee it are continually trying to make sure that knowledge of the pension plan is high among those who will eventually benefit from it–the grooms, hot walkers, exercise riders, assistant trainers, foremen, watchmen and other stable employees who now number more than 13,000 vested participants since the fund first started in 1971.“Our biggest issue is awareness,” said trainer David Donk, one of seven trustees for the pension plan. “Our job, at times, is to educate everyone. [The lack of awareness] is something we've been trying to change. This is a great opportunity to do that. The most important people that should know it exists are the people that work on the backstretch, and all the trainers that employ them, so that together they can make smart decisions.”New York is not alone in providing retirement benefits to backstretch workers. At least two other states, Maryland and West Virginia, offer some form of assistance.But New York's retirement program is the oldest, and its genesis traces to a controversial boycott in the spring of 1969 that halted racing for nine days at Aqueduct.According to archived reporting from the New York Times, the horsemen at that time, contending that annual funding of $1.7 million was needed for a realistic pension plan for NYRA backstretch workers, had proposed that the state grant four extra days of racing and use part of the parimutuel tax revenue to finance the program. When New York declared that plan unconstitutional, trainers refused to enter horses.Eventually, an agreement was reached that called for NYRA to provide a purse increase, with 1% of the purses earmarked for the pension fund–although it took nearly another two years for the program to get formally established and up and running.“It's a start,” Reginald Webster, who at the time was a prominent horse owner, a NYRA trustee, and the fund's first co-chair, told the Times in 1971. “Like any pension trust, it will start small and build up every year. As the years go by, the fund will increase.”The pension plan did grow over the course of the next half-century, with its funding remaining level at 1% of purses.“It's amazing that over 50 years ago, the actuaries advised us that the fund be funded by 1% of the purses,” Donk said. “And that lasted over 50 years. The biggest success of that is the investment portfolio has done well. It's been extremely well-run by all our financial advisors. But our actuary had informed us years ago that, at some point, we're going to have to increase the benefit. And that came to a point two years ago.”Thus, as of Jan. 1, 2025, with the backing of both the New York Thoroughbred Horsemen's Association (NYTHA) and NYRA, the purse contribution doubled to 2%.Anthony Trimarchi, a managing director at J.P. Morgan Private Bank, is a racehorse owner and breeder on the NYRA circuit. He has served on the pension fund's board of trustees for the past six years, and he told TDN that even as someone familiar with the professional management of money, it can be difficult to understand all of the inner workings of the plan.“What makes it unique is that the owners don't actually employ anyone,” Trimarchi said. “The backstretch employees who are beneficiaries are employed by the trainers. But the owners are funding the plan. So that's what makes it unique. It's a 'defined benefit' plan, but it's being funded by a group of people who don't actually employ anybody.David Donk | Sarah AndrewIn a defined benefit plan, the monthly benefit for retirees is derived from a formula that takes into account years worked and vesting rules, with the investment performance happening largely behind the scenes.“I'm a finance guy,” Trimarchi continued. “But I had to learn the nuances of pension plans. It's very complicated. It's not super-intuitive, especially some of the nuances of this being a defined benefit plan, which is very rare, funded by a bunch of people who actually don't employ anybody. Our actuaries would probably tell you this is one of the most unique plans they've ever seen.”Sue Pappas, the plan's administrator for the past eight years, has worked in the backstretch pension office for almost 25 years in total. She said between 55 and 65 NYRA backstretch workers retire each year and start claiming benefits, which become payable at age 65 (or earlier under certain circumstances).“They have to earn enough in their job category for the year,” to be qualified for a year of service, Pappas said. “So, for example, an exercise rider, they need to earn $14,000 for the entire year in order to be qualified for credit. We do verify all their years with Social Security, and we request a W2. Each job category has a different amount that they need to earn for the year.”On the NYRA circuit, a backstretch worker's pension becomes “vested” (theirs) after five years of service.According to Trimarchi, the plan “has had top-percentile investment performance” based on three-, five- and 10-year time frames.But, Trimarchi added, “when it comes to running a pension plan, there are a lot of other complexities” related to things like Pension Benefit Guaranty Corporation (PBGC) rules and Internal Revenue Service (IRS) standards.And this, Trimarchi explained, is where the recent doubling of the purse contributions from 1% to 2 % comes in.“Basically, to make the plan as efficient as possible, we needed to be in a position where not only the assets were performing, but we had asset levels that were high enough to avoid really high premiums,” Trimarchi said. “And that 1% of the purse account, the approach that was set up back in the '70s, it worked for 50 years.“But, as the plan has grown, and as the complexity of administering a plan like this has grown, it just wasn't sufficient to cover all of the IRS or the PBGC requirements,” Trimarchi said. “If we didn't increase [the purse contribution], the overhead cost of the plan would have gone up a lot.”An alternative, Trimarchi explained, could have been to change the underlying structure of the fund, which the trustees didn't want to do.“There are so many layers of complexity and actuarial tables and insurance and IRS requirements,” Trimarchi said. “In the real world most defined benefit plans have been converted to 'defined contribution' plans.”A defined contribution plan is best exemplified by a traditional 401(k) or 403(b) plan. An employee (and/or their employer) elects to set aside paycheck money to invest in stocks, bonds or other investment vehicles, and the balance grows (or shrinks) based on market performance. The retirement benefit depends on how much was contributed and how well the employee's investments performed.That's more or less the opposite of a defined benefit, where employers promise a specific future monthly payment, generally based on salary and years of service. The employee gets predictable fixed income (often for life) but has no individual say in how that retirement money gets invested and grows.Sarah Andrew“We didn't think [something like a 401(k) or 403(b)] was the right path for this population of people,” Trimarchi said. “We didn't want to just convert this to a plan where we say, 'Hey, backstretch, you can contribute if you want. You don't have to, and if you don't, there's nothing there for you.'“We felt it was really important to keep it as a defined benefit plan and not to cut benefits,” Trimarchi said.“If we didn't make some of these important decisions over the last few years, and if we didn't have the partnership of NYTHA and NYRA to increase funding, there would have come a time where like some of those decisions would have been on the table,” Trimarchi said. “And our trainers committee and our board of trustees was just simply not willing to let that happen.”Now, Trimarchi said, “I think we have gotten the plan to a place where it's built to survive the next 50 years. Investment performance is not enough to make it all work.”Donk said the pension plan, plus new dormitories at the rebuilt Belmont Park, improved living facilities at Saratoga, and the circuit's well-established health clinic and child care programs, can all be used as incentives for trainers to hire and keep good help.“There's an advantage to work in New York,” Donk said.“My own staff, I don't have turnover,” Donk explained. “But it's not easy to retain workers. It's not easy to get people to drive into New York, let alone come here to work.“What's very unique about New York [racing], it's year-round,” Donk said. “So we have a lot of families, people who raise their families here. And with all of this stuff that's available to them-all these programs on the backside, a daycare center for their children when they're small, a pension that is available–it gives them a little bit of security.”Trimarchi continued that line of thought: “At the inception of this, the horsemen, the trainers, the owners, all agreed that having a [pension] plan was in the best interests of racing in New York. To have the best sport, and have the best product, and to continue to exist [like we have] for the last 55 years, everyone agreed that it was important to take care of the people who are doing the hard work on the backside. And that's arguably as true, if not more true, today, right?“So it's in everyone's best interest,” Trimarchi said. “We are all rooting for the sport. We all love the sport. Just like aftercare is an important part of our ability to continue to have a great sport and business going forward. taking care of the people is equally important.“If there's no one to work on the backside, labor costs go up. The cost of business goes up,” Trimarchi said. “So we could, as owners and trainers, just do nothing. And you know that the cost of getting good help will be higher, and the cost of doing business in New York will be higher.“Or we could get together as a group and do something great, which I think is what this plan represents. It's the right thing to do in terms of like our ability to continue to operate, and it's the right thing to do for each other as human beings,” Trimarchi said.The post New York Pension Fund For Backstretch Workers Enters 56th Year appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.