After each regular meeting of the Board of Directors of The Board of Pensions of the Presbyterian Church (U.S.A.), the Board of Pensions publishes The Board Bulletin, providing a record of actions taken at the meeting. This Bulletin reports key information presented and actions taken at the fall 2015 meeting that affect plans and programs administered by the Board of Pensions.
Board Staff Proposes Benefits Plan Redesign
Informed by ongoing conversations with the Church, initiated over a year ago, Board staff brought to the Board of Directors a redesign of the Benefits Plan of the Presbyterian Church (U.S.A.) for 2017. The proposed redesign plays a critical role in the Board’s commitment to wholeness.
The goal is to provide one plan that keeps the covenant with installed pastors while giving flexibility to employers so they may offer benefits to other teaching elders and other employees based on their resources.
To assist the Directors in their consideration of its recommendation, Board staff prepared an overview, 2017 Benefits Plan Redesign, which includes
- A Theology of Benefits, which is scripturally based and upholds the Church’s historical understanding of fair compensation, including salary and benefits;
- Our Calling, which connects the Theology of Benefits to the proposed benefits plan;
- 2017 Benefits Plan Design, a single plan that preserves existing benefits for installed pastors and offers a menu of benefit options for all other employees; and
- Guide to Terminology.
The Reverend Frank Clark Spencer, President of the Board of Pensions, speaks to the origins and intent of the redesigned plan in the video That They May Have Life Abundant ... .
The full Board of Directors will make a final decision on the redesigned plan at its March 2016 meeting. Until then, all parties — mid councils, employers, and members — are invited to continue with the Board of Pensions on its journey of transformation and hope.
For more information, watch the video and review
2017 Benefits Plan Redesign. (To play the video full-screen, click both the multi-arrow icon and the play arrow.)
Balanced Investment Portfolio Long-Term Returns Remain above Benchmarks despite Negative 3.7 Percent for the Nine Months Ended September 30, 2015
Investment Committee Chair Jacqueline D. Jenkins provided an overview of the work of the Investment Committee on behalf of members of the Benefits Plan and their beneficiaries.
The Committee affirmed the long-term strategic asset allocation ranges and the September 30, 2015, asset allocation of 36.4 percent in U.S. stocks, 19.3 percent in international stocks, 31.2 percent in fixed income, and 14.1 percent in other assets. The Committee also reviewed the alternative investment component of the portfolio and approved an investment allocation of up to 3 percent in real estate. The Committee approved commitments to a real estate manager and with an existing manager for global private equity.
Ms. Jenkins commented on the 2015 year-to-date performance of negative 3.7 percent within the framework of global economic and political events that resulted in volatile investment performance for many asset classes. The negative 3.7 percent return of the Balanced Investment Portfolio slightly lagged the negative 3.6 percent return of the Asset Mix Policy Benchmark for the nine months ended September 30, 2015. The portfolio outperformed the Policy Benchmark for the 10 and 20 years ended September 30, 2015. The Policy Benchmark assumes passive management of the portfolio using index funds.
Judith D. Freyer, Senior Vice President, Treasurer, and Chief Investment Officer, provided a review of the asset allocation of the Board of Pensions Balanced Investment Portfolio since the inception of the portfolio in 1987. She reviewed 2014-2015 investment decisions and outlined strategies for 2016.
The Balanced Investment Portfolio is the investment fund for the Pension Plan, Death and Disability Plan, Endowment Fund, and Assistance Program assets as well as restricted gifts made to the Board of Pensions. On September 30, 2015, the portfolio had a market value of $8.1 billion.
Directors Approve 2016 Initiatives
The Directors approved the Board’s 2016 Initiatives, in furtherance of the 2015-2016 Strategic Vision and underscoring the Board’s commitment to serve more, serve better, and serve the Presbyterian Church (U.S.A.).
The 2016 Initiatives focus on how the Board will implement the redesigned Benefits Plan, how it can further enhance church engagement, and how to manage investment market risk.
The Directors also approved the administrative and capital expense budgets needed to implement the initiatives.
Board of Pensions Endorses Collaborative Agenda for Environmental Stewardship
Joining with other agencies of the General Assembly, the Board of Pensions, by action of the Board of Directors, endorsed the
Collaborative Agenda for Environmental Stewardship (or simply, Collaborative Agenda).
Written by a task force of one representative from each agency and led by Board of Pensions President Frank Spencer, the document describes the agencies’ actions to date and future plans to model environmental stewardship. The Collaborative Agenda is noteworthy for gathering the contributions of all six agencies into a unified presentation for consideration by the 222nd General Assembly (2016).
The Board of Pensions has committed to its activities as outlined in the document, and is recommending that the General Assembly endorse the entire Collaborative Agenda for Environmental Stewardship.
Medical Dues Update
Rates for Medicare Supplement Coverage To Rise
Although the Board has made concerted efforts to control costs, spending for prescription drugs, especially specialty medications, continues to rise sharply. Because of these increased costs, the monthly subscription charges for retired members enrolled in the Medicare Supplement Plan will increase $35 per person, effective January 1, 2016. The monthly dues charged for coverage will be $259 per individual, or $518 for members and their Medicare-eligible covered partners.
Even with the increase, Medicare Supplement participants are not being asked to pay the full cost of their coverage. This is because the Medicare Supplement Plan continues to qualify for a federal subsidy, and churches also help subsidize participants’ coverage costs through the payment of vacancy dues.
Medical Continuation Rates To Increase
Former Traditional Program members enrolled in the Medical Continuation Program will see a monthly rate increase of approximately 5 percent, on average, for 2016. Subscription rates will go from $788 to $827 per month for members and from $1,576 to $1,654 per month for a member, covered partner, and/or children. The rates, which take effect January 1, 2016, reflect the claims experience for the enrolled population.
The increase does not apply to
former Affiliated Benefits Program participants enrolled in Medical Continuation. The Directors, by past action, had already increased the monthly subscription charges of this group for 2016 by approximately 5 percent. This information was reported in the
Former members have the option not to continue their coverage under the Medical Continuation Program and instead obtain coverage under another qualified plan, including any plan on the federal or state health insurance marketplace. The benefits available under another qualified plan may better meet an individual’s needs and be more affordable.
Dental Plan Dues Remain Unchanged
Board staff reported the 2016 rates for the optional dental coverage administered by Aetna and available to eligible active members of the Benefits Plan and their eligible family members. The rates for the PPO (preferred provider organization) and the DMO (dental maintenance organization) plans will remain the same as for 2015.
During annual enrollment, now underway, members can go to the Board’s
optional dental benefit rate checker to find out which plan they are eligible for and view the rates.
Other Dues Information Reported
Dues for medical coverage under the Traditional Program will remain the same for 2016 as they are for 2015. Affiliated Benefits Program medical dues will rise approximately 5 percent, on average.
Board Bulletin for details.
Assistance Program Updates
Assistance Committee Approves 2016 Spending Policy and Boosts Supplements
The Assistance Committee is required to vote each fall on a policy for the coming fiscal year to guide assistance funds spending. The Committee voted to continue its current policy in 2016, setting the maximum budget for the Assistance Program at 5 percent of the average of the year-end balances of the program’s core funds for the years 2011-2015.
The spending formula protects the Assistance Program from the volatility of the investment market, ensuring a dependable and steady source of funding is available for its grant programs.
Based on the projected available income to support the Assistance Program of the Board of Pensions, the Assistance Committee increased, for 2016, the current income targets for the Income Supplement program and maximum income level guidelines for Housing Supplement eligibility:
Income Supplement Target Levels
- $29,760 for retired single persons
- $35,700 for retired members with covered partners
A target level is the maximum income a retired single person or member with a covered partner will have after an Income Supplement is added to all other sources of income. It is the most a member’s income will be after financial assistance from the Board is added.
Housing Supplement Maximum Income Levels
Retired plan members whose total retirement income falls below $41,640 a year may qualify for housing assistance if they meet certain other eligibility guidelines.
Continuing a time-honored tradition, the Directors approved Christmas gifts from the Assistance Program of the Board of Pensions for the recipients of Income and Housing supplements. Single individuals will receive gifts of $250; members with covered partners, $500. The gifts will be sent to all plan members receiving Income and/or Housing supplements as of
November 1, 2015.
Income and Housing supplements help retired church workers and their surviving covered partners live independently and with dignity. To qualify, their total income from all sources must fall below levels set by the Board.
Sale of Last Retirement Housing Community Completed
On October 26, the Assistance Program of the Board of Pensions sold the last of its retirement homes properties: El Sombroso Oaks in Los Gatos, California. The sale of the property to Episcopal Senior Communities concludes the Assistance Program’s efforts, begun in 1988 and authorized by several General Assemblies, to redirect its homes program to provide direct financial support to eligible retired church workers.
A term of the sale is that the current residents of El Sombroso Oaks, who occupy 17 of 22 units, may remain in their homes for as long as they choose. The Assistance Program will subsidize their rents.
The Church, through the Assistance Program and its predecessor programs, has maintained “brick and mortar” homes since 1833 but in recent years has seen decreasing demand for this housing. Today’s retirees want, or need, to choose housing arrangements that best meet their needs — from independent living, up to and including assisted living — options that didn’t exist when the homes program began.
“Providing financial assistance to support a range of retirement housing options makes the most sense today,” the Reverend Peter C.S. Sime, Vice President, Assistance, CREDO, & Funds Development, told the Assistance Committee. “This sale signifies that the Assistance Program — and the Church — are adjusting to changing times.”
The proceeds of the sale will go to the Assistance Fund to help meet the assistance needs of future retirees.
Questions or Comments?
The Board of Pensions of the Presbyterian Church (U.S.A.)
2000 Market Street
Philadelphia, PA 19103-3298
- Call 800-773-7752 (800-PRESPLAN)
Follow the Board of Pensions on Twitter and Like Us on Facebook!