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 information on actions taken at the meeting. This Bulletin reports key information presented and actions taken at the spring 2016 meeting that affect plans and programs administered by the Board of Pensions.
Experience Apportionment Granted
The Board of Directors approved a
2 percent experience apportionment for the Pension Plan,
effective July 1, 2016. The apportionment, the fourth in four years, complies with the Board of Pensions experience apportionment policy guidelines. Those guidelines, which are tied to the overall funded status of the plan, seek to balance short- and long-term goals: to provide annual increases, maintain generational equity, and ensure the long-term financial stability of the plan. The Pension Plan was funded at 123.7 percent as of December 31, 2015 (before the action was taken).
An experience apportionment is a lifelong increase in pension benefits or credits, depending on employment status:
For retirees and eligible survivors, an experience apportionment is an increase in the individual’s current pension benefit for as long as the person lives, expressed as a percentage of benefits received. Pensioners will be notified of the amount of the increase to their pension checks in late June; their July pension checks will reflect the increase.
For active and terminated vested members, an experience apportionment is an increase in the individual’s pension credits accrued as of December 31, 2015, expressed as a percentage of the accumulated credits. Terminated vested members will be notified of the increase in their pension credits in mid-July.
The Directors annually review plan reserves and other data. Experience apportionments are not guaranteed to be granted each year.
Directors Approve 2017 Benefits Plan
In October 2015, the Board of Pensions presented a proposed redesign of the Benefits Plan of the Presbyterian Church (U.S.A.) as part of a transformational process to serve more, serve better, and serve the Church, as reported in the fall 2015 edition of
The Board Bulletin. At its meeting March 5, the Board of Directors approved the 2017 Benefits Plan.
The plan, which takes effect January 1, 2017, affirms the Board’s commitment to teaching elders and to the values of caring for those who serve the Church. It is connectional and restores complete call neutrality. Anchored in
A Theology of Benefits, it holds that we care for each other as part of the community the Holy Spirit has gathered. In the video That They May Have Life Abundant ..., the Reverend Frank Clark Spencer, President of the Board of Pensions, discusses the origins and intent of the redesign.
Central to understanding the 2017 Benefits Plan is knowing what’s not changing. Benefits for installed pastors will continue to include:
- the Pension Plan (dues of 11 percent of effective salary, fully paid by the employer);
- the Retirement Savings Plan of the Presbyterian Church (U.S.A.) (RSP) (employer and/or member contributions voluntary);
- preferred provider organization (PPO) medical (dues of 24.5 percent of effective salary, fully paid by the employer);
- death and disability coverage (dues of 1 percent of effective salary, fully paid by the employer); and
- availability of dental, supplemental death, and supplemental disability coverage (with coverage-level pricing).
A change for 2017 is the restoration of call neutrality: Employers will not be able to share any portion of the medical dues amount with installed pastors. At the meeting, medical dues were approved for 2017 at
24.5 percent of effective salary, regardless of coverage level (member-only, member + child(ren), member + spouse, member + family).
As required by the
Book of Order, all installed pastors must be enrolled for benefits, now met by Pastor’s Participation. For nearly 80 percent of congregations in the plan today this requires no change, as they cover only an installed pastor and no other employees.
A fundamental change to the plan is that employers will be able to make decisions about the benefits they offer to other employees and how much they will ask their employees to contribute toward the cost of medical coverage. The plan is no longer “all or nothing,” but is designed for flexibility to meet the many contexts of ministry.
Employers may select benefits from a menu of options for their other employees. Employers may choose to offer any or all of the following:
- the Pension Plan (dues of 11 percent of effective salary, fully paid by the employer)
- the Retirement Savings Plan of the Presbyterian Church (U.S.A.) (RSP) (employer and/or member contributions voluntary)
- medical coverage in the PPO and/or an exclusive provider organization (EPO) (with coverage-level pricing)
- employers pay at least 50 percent of the cost of member-only coverage
- employers can ask members to pay up to 100 percent of the incremental coverage costs for other coverage levels
- death and disability coverage (dues, fully paid by the employer, of 1 percent of effective salary if offered with the Pension Plan or 3.5 percent of effective salary if offered on a stand-alone basis)
- availability of dental, supplemental death, and supplemental disability coverage (with coverage-level pricing)
For medical coverage, the costs will be shown in dollars by coverage level (member-only, member + child(ren), member + spouse, member + family). The costs will be employer-specific based on several factors, including the geographic region in which the employer is located.
Recognizing that the new approach may result in higher costs at certain coverage levels and in certain regions, the plan will provide transitional support for three years, through 2019, to help mitigate the increases.
The plan maintains the important value of community nature in several significant ways. PPO deductibles and copayment maximums are tied to salary. Members accrue pension credits based on the greater of salary or of the median income. Members receiving disability benefits continue to accrue pension credits. Death benefits include salary continuation payments to survivors.
Teaching elders who are not installed in a pastoral relationship with a congregation may, at the decision of the employer, be enrolled in Pastor’s Participation or, as with other employees, offered menu options.
Employers and plan members are encouraged to read the
2017 Benefits Plan Redesign for details on this summary provided here. In the upcoming weeks and months, the Board will provide further communication about these changes through print and electronic media as well as calls to employers. Employers will be able to begin to make decisions midsummer. Employees will then elect benefits from their employers’ offerings in the fall.
The Board’s Regional Representatives and Member Services and Employer Services teams will be available to assist or answer questions as we work through these changes together.
Helping employers provide benefits to more employees, helping them be the best they can be, is a faithful way to lift up the Church. This redesign will enable the Church to serve the whole community, from the smallest congregations to the largest.
Maximum Expense Guidelines for Housing Supplements Raised
At the recommendation of Board of Pensions staff, the Assistance Committee reviewed the guidelines for the maximum monthly housing expenses considered by the Assistance Program in awarding Housing Supplements and voted to increase them as follows:
MAXIMUM MONTHLY HOUSING EXPENSE GUIDELINES
Type of Accommodation
Home or apartment in the general community
Independent living unit in a retirement community
Congregate living unit (separate living quarters, no cooking facilities) in a retirement community or equivalent home support
Assisted living unit in a retirement community or equivalent home support
Board of Pensions staff periodically researches housing costs, using Presbyterian-related retirement communities as a benchmark, to ensure the adequacy of the Board’s housing subsidies to eligible retired pastors and other PC(USA) church workers in need.
To qualify for a Housing Supplement, an eligible retired pastor, other church worker, or surviving spouse must meet several criteria, including contributing 40 percent of his or her income toward independent housing or living, or 67 percent toward congregate or assisted living, and not exceeding the maximum annual income guideline of $41,640.
Disability Benefits To Increase
The Directors granted a disability benefit increase of
1 percent for members receiving disability benefits on December 31, 2015. The increase,
effective July 1, 2016, is meant to help offset cost-of-living increases.
The assets and liabilities of the Death and Disability Plan are evaluated independently of the other plans administered by the Board of Pensions. In considering the decision, the Directors reviewed investment and actuarial experience, reserves, and cost-of-living changes and determined that the benefit increase is both necessary and appropriate.
The Directors review plan reserves and economic data annually. Disability benefit increases are not guaranteed to be granted each year.
Balanced Investment Portfolio Returned Negative 1.1% in 2015
Jacqueline D. Jenkins, Chair of the Investment Committee, provided an overview of the work of the Investment Committee on behalf of members of the Benefits Plan and their beneficiaries.
The Committee heard a presentation on investing in private equity and reviewed the U.S. and international equity components of the portfolio. The Committee affirmed current long-term strategic asset allocation ranges for the Balanced Investment Portfolio.
Judith D. Freyer, Chief Investment Officer, reviewed 2015 performance and 2016 global opportunities within the context of continued volatile markets for many asset classes. The December 31, 2015, asset allocation was 36.6 percent in U.S. stocks, 19.8 percent in international stocks, 30.2 percent in fixed income, and 13.4 percent in other assets.
While the 2015 Balanced Investment Portfolio return of (1.1) percent lagged the 2015 Asset Mix Policy Benchmark of (0.4) percent, the portfolio exceeded the return of the Asset Mix Policy Benchmark for the 15- and 20-year periods ended December 31, 2015. The Policy Benchmark assumes passive management of the portfolio using index funds. Ms. Freyer noted that, since 1990, the Balanced Investment Portfolio had provided an additional $774 million in assets above the benchmark.
The Balanced Portfolio is the investment fund for the Pension Plan, Death and Disability Plan, Endowment Fund, and Assistance Program as well as for restricted gifts made to the Board of Pensions. On December 31, 2015, the portfolio had a market value of $8.2 billion.
2015 Investment Review is available on pensions.org.
Directors Elect Leadership for Upcoming Year
The following Directors were elected to serve in Board leadership roles for the upcoming year:
John W. Hamm ||Chair|
|Rev. Dr. Lindley G. DeGarmo||First Vice Chair |
Rev. Dr. Fairfax F. Fair||Second Vice Chair |
According to the bylaws, officers are elected annually. Directors may serve up to two consecutive four-year terms on the Board of Directors.
The Board of Directors governs the Board of Pensions, which administers pension, healthcare, death, and disability benefits and financial assistance for qualifying members who serve or have served the Presbyterian Church (U.S.A.).
Retiring Directors Recognized
Fellow Directors and members of the Board of Pensions leadership team recognized the contributions of the following Directors, who have served on the Board of Directors since 2008 and whose terms expire at the conclusion of the 222nd General Assembly (2016):
- Dr. Robert A. Gorsky
- Judith A. Harris
- Rev. John H. Hougen
- Linda J. Jacobsen
- Frank S. James III
- Dr. Bettina B. Kilburn
- Joseph M. Kinard
“These individuals made significant contributions in the areas of healthcare, assistance, pension policy, and more,” said Mr. Hamm, Chair of the Board of Directors. “Each one has left a legacy, and we are grateful for the gifts of leadership, acumen, fellowship, and faith that they brought to our work together.”
Nominations for incoming Directors will be submitted by the General Assembly Nominating Committee to the 222nd General Assembly (2016) for election.
Questions or Comments?
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Philadelphia, PA 19103-3298
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