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The Board Bulletin — Fall 2016


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. This Bulletin reports key information presented and actions taken at the fall 2016 meeting that affect plans and programs administered by the Board of Pensions.

Balanced Investment Portfolio Returns 7.2 Percent for the Nine Months Ended September 30, 2016

Rev. Dr. Lindley G. DeGarmo, Chair of the Investment Committee, provided an overview of the work of the Committee on behalf of the members of the Benefits Plan and their beneficiaries, and Judith D. Freyer, Executive Vice President and Chief Investment Officer, reviewed the 2016 year-to-date performance of 7.2 percent within the framework of global economic and political events that resulted in volatile investment performance for many asset classes.

In a joint meeting of the Investment and Pension committees, the Investment Committee affirmed the Balanced Investment Portfolio long-term strategic asset allocation ranges and the September 30, 2016, asset allocation of 35.8 percent in U.S. stocks, 20.1 percent in international stocks, 29.9 percent in fixed income, and 14.2 percent in other assets.

The joint committees also participated in a comprehensive review of future long-term capital market assumptions and their impact on the Balanced Investment Portfolio. As global economic and market conditions and historically low global interest rates have dampened expectations for long-term investment returns for almost all asset classes, the Investment Committee recommended — and the Directors approved — a reduction in the expected long-term investment return for the portfolio, from 7 percent to 6 percent.

By moving to a more conservative assumption for financial planning, the Board has taken a step to ensure the long-term solvency of the Pension Plan, whose assets make up 90 percent of the portfolio. “We would not be serving well if we continued to rely on a long-term investment assumption of 7 percent when all indicators are that we are simply not going to achieve that in today’s market environment, at least not without exposing the plan to untenable risk,” President Frank C. Spencer said.

As part of the joint meeting, the Investment Committee approved the addition of a fossil fuel-free global stock fund to the investment lineup for the 403(b)(9) Retirement Savings Plan of the Presbyterian Church (U.S.A.) (RSP), effective January 1, 2017. In addition to being fossil fuel-free, the Pax Global Environmental Markets Fund Institutional Class (PGINX) proactively invests in companies worldwide that produce products or create solutions to drive positive performance in environmental sectors, including alternative energy, water infrastructure, waste management, and sustainable food, agriculture, and forestry.

The Investment Committee also reviewed the alternative investment component of the portfolio and approved limited partnership commitments to a new real estate manager relationship and to an existing manager for private equity investments in technology.  

The 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, 2016, the portfolio had a market value of $8.6 billion.        

Watch Frank C. Spencer discuss why the Board is changing its long-term investment return assumption.


Retirement Savings Plan To Offer Three New Features

Three new features — managed accounts, a brokerage window, and a loan feature — will be added to the RSP, effective January 1, 2017, to better support participants’ retirement savings strategies:

  • Managed Accounts: The Investment Committee approved the addition of managed accounts through Strategic Advisors Inc., a Fidelity Investments company. This feature gives participants access to experienced investment professionals, who can help them create an appropriate investment strategy and actively manage an account portfolio based on personal circumstances, profiles, and preferences.
  • Brokerage Window: This feature gives participants access to investment options beyond those available in the plan today — through Fidelity BrokerageLink. Participants can invest retirement savings in any mutual funds offered by Fidelity, just as they would invest in any other plan option, and transfer savings between the window and other funds.
  • Loans: The loan provision allows participants to borrow from their RSP account balances and pay their accounts back. Loans are generally limited to the lesser of 50 percent of the account balance or $50,000 minus the participant’s highest loan balance in the past 12 months.

Medical Dues Update

The Healthcare Committee received reports of the 2017 rates established for the Medicare Supplement Plan, medical continuation coverage, and the Dental Plan.

Medicare Supplement Rates To Rise

Medical expenses, especially for prescription drugs, continue to rise, despite the Board’s concerted efforts to manage costs. As a result of 2016 claims experience, the monthly cost for coverage for retired members enrolled in the Medicare Supplement Plan will increase $16 per person, effective January 1, 2017. The monthly rate charged will be $275 per individual, or $550 for members and their Medicare-eligible spouses.

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’ payments of vacancy dues help subsidize the costs.

Medical Continuation Rates To Increase

Beginning January 1, 2017, medical continuation rates across all coverage levels will reflect true costs to the Medical Plan for enrollees based on 2016 claims experience; these rates do not necessarily reflect pricing for active medical coverage.

Medical continuation enrollees who formerly had Traditional, Affiliated Benefits Program (ABP), or Anthem coverage are eligible for PPO (preferred provider organization) coverage. Those who formerly were in the EPO (exclusive provider organization) may continue their participation through EPO medical continuation coverage.

2017 Medical Continuation Monthly Rates
Coverage Level
Member + Child(ren)
Member + Spouse
Member + Family


Former members may choose not to continue their medical coverage through the Board of Pensions 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 Rates Unchanged

Board staff reported the 2017 rates for 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 2016.

During annual enrollment, now underway, members can log on to  Benefits Connect to find out which plan they are eligible for and view the rates.

Assistance Program Updates

2017 Spending Policy Approved

The Assistance and Church Engagement Committee voted to continue the current policy guiding assistance funds spending and set the maximum budget for 2017 at 4 percent of the average of the core fund year-end balances for the years 2012-2016.

The spending formula protects the Assistance Program of the Board of Pensions from the volatility of the investment market, ensuring a dependable and steady source of funding for its grant programs.

Supplement Level Guidelines Increased

For 2017, the Assistance and Church Engagement Committee increased the current income targets for the Income Supplement program and maximum income level guidelines for Housing Supplement eligibility, as follows:

Income Supplement Target Levels

  • $30,420 for retired single persons
  • $36,540 for retired members with spouses

A target level is the maximum income a retired single person or member with a spouse 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 $42,640 a year may qualify for housing assistance if they meet certain other eligibility guidelines.  

Income Guideline Established for Assisted Living Assistance

The Directors approved the establishment of an income eligibility guideline for retired plan members in assisted living facilities: 100 percent of the Average Pensions of Retired Teaching Elders, as reported annually in Highlights, a Board of Pensions publication that provides key statistics on the Benefits Plan. The change addresses the needs of a group of retirees whose incomes are not sufficient to meet the cost of assisted living but exceed the income limit for Housing Supplements.

For 2017, the assisted living income eligibility guideline will be $60,910. This guideline will be reviewed by the Assistance and Church Engagement Committee annually, and any change would take into consideration the financial soundness of the Assistance Program.

Eligibility Expanded for Sabbath Sabbatical Support Grants

The Directors expanded the eligibility criteria for Sabbath Sabbatical Support Grants, effective immediately. In addition to pastors currently serving a congregation of fewer than 200 members, other teaching elders serving in positions that directly support congregational ministry may now apply for this grant through their presbyteries.

Program Name Changed; Grant Amounts Increased

The Seminary Debt Assistance Program has been renamed the Minister Educational Debt Assistance Program. Teaching elders who meet the eligibility requirements can receive a grant of $2,500 per year for up to four years if their effective salary falls below the churchwide median effective salary. Formerly, eligible pastors could receive grants of $1,500 per year for up to four years.

Christmas Gifts To Be Given

Christmas gifts will again be presented by the Assistance Program to the recipients of Income and Housing supplements. Single individuals will receive gifts of $250; members with spouses, $500. The gifts will be sent to all plan members receiving Income and/or Housing supplements as of November 1, 2016.

Income and Housing supplements help retired church workers and their surviving spouses live independently and with dignity. To qualify, their total income from all sources must fall below levels set by the Board.

Directors Approve Two-Year Strategic Vision and 2017 Initiatives

The Directors of the Board of Pensions approved the Board’s 2017-2018 Strategic Vision. It focuses on the healthy growth of Benefits Plan membership, which will include ensuring that the plan remains market-competitive and that the Board’s constituents firmly grasp the workings of the plan and its value. The document also calls for developing an educational approach to support the well-being of teaching elders and other church workers. Underlying the Strategic Vision is the need to attain a firm commitment to A Theology of Benefits, and drive home the principle that just compensation is the moral choice.

The Directors also approved the Board’s 2017 initiatives, guided by the 2017-2018 Strategic Vision and the Board’s commitment to serve more, serve better, and serve the Presbyterian Church (U.S.A.), as well as the administrative and capital expense budgets needed to implement the initiatives.

Senior Officers Elected

In accordance with the Board of Pensions bylaws, the Directors approved the election of the following senior officers:

  • Michael F. Fallon Jr. – Executive Vice President and Chief Financial Officer
  • Judith D. Freyer – Executive Vice President and Chief Investment Officer
  • Patricia M. Haines – Executive Vice President and Chief Benefits Officer
  • John G. McFayden – Executive Vice President and Chief of Church Engagement
  • Susan Reimann – Executive Vice President and Chief Operating Officer
  • Andrew J. Browne – Vice President, Church Relations
  • José R. Irizarry – Vice President, Education
  • Linda J. Jacobsen – Vice President, Growth Strategies and Solutions
  • Raymond Bonwell – Corporate Secretary

Questions or Comments?

If you have questions about your benefits, call the Board at 800-773-7752 (800-PRESPLAN) and speak with a  service representative.

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