The Board Bulletin is published after each regular meeting of the Board of Directors of The Board of Pensions of the Presbyterian Church (U.S.A.), and represents key information and actions taken that affect plans and programs administered by the Board of Pensions.
Directors gathered for worship in community with Board staff Friday morning, October 25, in Denver. The Reverend Fernando Rodríguez opened worship, elder Larry Palmer offered the Prayers of the People, and the Reverend Dr. Stan Reid preached on attending to the work of the Board with humility and gratitude in service to the Church. Music was provided by Daniel Romero, organist at Wellshire Presbyterian Church, Denver.
From worship, Directors moved into the Director Education Session — The Whole is Greater than the Sum of Its Parts. The session focused on the legal standard that binds them as Directors and emphasized their strengths as a diverse body with the skills and expertise required for the complex work of the Board of Pensions.
The Reverend Dr. Fairfax F. Fair, Chair of the Board of Directors, concluded the morning session by recognizing the Arapaho and the Cheyenne and Ute nations, the first peoples on the land. Recognizing the indigenous peoples responds to the request of the 223rd General Assembly (2018).
Expanding existing support and planning for new ways to help congregations and affiliated employers meet the needs of their ministers and employees were central to the business addressed by Directors on Saturday, October 26. More ministers in Puerto Rico are now eligible for Healthy Pastors, Healthy Congregations, and the stage is set for the development of new benefits products, enabling the Board of Pensions to continue serving more, serving better, and serving the Church. More on this and other news from the meeting appears below.
Judith D. Freyer, Executive Vice President and Chief Investment Officer, reviewed the performance of the Balanced Investment Portfolio for the eight months ended August 31, 2019 — 10.3 percent — within the framework of global economic and political events. The portfolio exceeded the 6 percent long-term investment return assumption for the three, 10, and 20 years ended August 31, 2019.
The Balanced Investment Portfolio is the investment fund for the Pension Plan, Death and Disability Plan, Endowment Fund, Medical Plan, and assistance programs as well as restricted gifts made to the Board of Pensions. On August 31, 2019, the portfolio had a market value of $9.6 billion.
Suzanne P. Welsh, Chair of the Investment Committee, provided an overview of the Committee's work on behalf of members of the Benefits Plan and their beneficiaries. The Committee is responsible for receiving and reviewing reports from Mission Responsibility Through Investment (MRTI), including the annual General Assembly Divestment List. The Committee adopted the 2020 Board of Pensions Prohibited Securities List, to include the 2020 General Assembly Divestment List, which will be distributed to all separate account managers.
The Investment Committee met in joint session with the Pension Committee to review the findings of the 2019 Asset-Liability Study. The Committee affirmed the long-term strategic asset allocation ranges approved by the Board of Directors and affirmed the 6 percent long-term investment return assumption. The August 31, 2019, asset allocation of 34.5 percent in U.S. stocks, 20.6 percent in international stocks, 29.4 percent in fixed income, and 15.5 percent in alternative assets was within the approved ranges for each asset class.
The Balanced Investment Portfolio has three major components: U.S. and international equity, fixed income, and alternative investments. The Committee meets three times a year and has an annual in-depth review of each component. At the meeting October 25, the Committee reviewed the fixed income component of the portfolio.
The Committee approved a commitment to a manager investing in venture capital partnerships.
Directors approved a prohibited securities policy for the Board of Pensions. The policy reaffirms that the agency acts on the prohibition of securities as approved by General Assembly and implemented by MRTI.
Ministers in the Synod of Boriquén who participate in the Pension Plan are now eligible for Healthy Pastors, Healthy Congregations, which provides financial education for ministers and congregational leaders and grants of up to $10,000 to qualifying ministers. Directors voted to adapt program requirements for these ministers, acknowledging the impact of Puerto Rico’s economic struggles on church finances. Their action nearly doubles the number of ministers in Puerto Rico who can participate in the program.
Directors also voted to allow grant money for these ministers to be applied to an emergency savings account or another retirement savings vehicle because tax laws in Puerto Rico prevent participation in the Retirement Savings Plan of the Presbyterian Church (U.S.A.). The grant may also be used to reduce or eliminate personal debt.
Directors increased the maximum annual income to qualify for an assisted living Housing Supplement, from $60,910 to $66,880, effective January 1, 2020. The maximum is 110 percent of the congregational ministers’ median effective salary ($60,800 for 2020).
The Board of Pensions provides Housing Supplements to help retired Presbyterian Church (U.S.A.) ministers and employees and surviving spouses stay in their homes or move to retirement facilities. Income Supplements are also available for eligible retirees and surviving spouses in need.
The budget for Board of Pensions assistance programs was established at $9.6 million for 2020, an increase of $1.6 million over 2019. The increase will particularly benefit expansion of Healthy Pastors, Healthy Congregations and Minister Educational Debt Assistance Grants.
Assistance funds provide critical financial assistance to retired and active members and their families. Gifts, legacies, endowments, and one-half of the Christmas Joy Offering provide support; no dues go into the assistance funds. To facilitate the budget increase for 2020, Directors approved a distribution equal to 4.5 percent of the market value of certain assistance funds, up from 4 percent in 2019. Their action followed established distribution policy.
Directors approved the Christmas gift from the Assistance Program to the recipients of Income and Housing supplements. Single individuals will receive $250; members with spouses, $500. Through the years, this extra income at Christmastime has been greatly appreciated. Many recipients have told the Board of Pensions that it has meant they could share in gift-giving. All plan members receiving Income and/or Housing supplements as of November 1, 2019, will receive the gift.
Rates for the Medicare Supplement Plan will remain unchanged in 2020, the third consecutive year without an increase. Based on positive claims experience and cost containment over the last three years, a rate increase was not needed. It was previously reported, in the Summer 2019 Board Bulletin, that an increase was likely.
Directors, who approved the 2019-2020 Strategic Vision in October 2018, at this meeting approved the 2020 business initiatives and associated administrative budget. In the year ahead, Board of Pensions staff will develop new product offerings to ensure Benefits Plan vitality.
The next meeting of the Board of Directors will be in Philadelphia, March 5-7, 2020. For further information, email the Corporate Secretary or call 215-587-7600.