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.
The Board of Directors has approved the most substantial changes to the Benefits Plan of the Presbyterian Church (U.S.A.) since the plan redesign of 2017. The changes are effective January 1, 2021.
Continued strong financial stewardship on the part of agency leadership enabled Directors to reduce pension dues, extend benefits and other assistance in support of minister well-being, reinforce financial protection with new disability plans, and broaden eligibility for financial assistance.
These changes help address the concern that too many ministers are not being enrolled in the Benefits Plan, denying them access to Board of Pensions programs designed to help them devote their best gifts to ministry. Further, they align with the agency goal that every minister and every employee of the PC(USA) and its affiliated organizations should have access to quality benefits in support of well-being.
Exciting news: the 2021 Benefits Plan
President Frank Spencer and Chairperson Fairfax Fair announce increased support for ministers and expanded access for all.
Pension dues are being reduced from 11 percent of effective salary to 8.5 percent, with no reduction or change in benefits. The pension dues reduction, the first in the plan’s history, reflects strong stewardship of assets through generations of Presbyterians.
The 2021 Benefits Plan provides two noncontributory packages for PC(USA) ministers: the existing Pastor’s Participation (including the new Temporary Disability Plan), required for installed pastors and available to other ministers, and a new package, Minister’s Choice.
Minister’s Choice provides pension and death and disability benefits, including the new Temporary Disability Plan, and an employee assistance plan. The employer cost for the package is 10 percent of effective salary. Any minister who is not installed and is employed a minimum of 20 hours a week is eligible for the package. Employers may elect to offer additional benefits and decide whether to share in the cost of any of these.
Minister’s Choice provides important financial protection and opens the door to assistance programs now available only through Pastor’s Participation: CREDO; Healthy Pastors, Healthy Congregations; Minister Educational Debt Assistance; and Sabbath Sabbatical Support. Additionally, Minister’s Choice gives access to Emergency Assistance, Adoption Assistance, and Transition-to-College Assistance.
2021 dues for Pastor’s Participation, the comprehensive package for ministers, will remain at 37 percent of effective salary: 27 percent medical, 8.5 percent pension, 1 percent death and disability, and 0.5 percent temporary disability (new for 2021). This will be the fourth consecutive year that dues have totaled 37 percent.
Directors voted to increase the maximum an employer would pay in medical dues to $33,500, with the minimum dues amount remaining at $11,000.
Note: The 2021 costs for medical coverage outside of Pastor’s Participation, unique to each employer, will be available online through Benefits Connect in mid-July.
The comprehensive protection provided through the Death and Disability Plan is unchanged. The Death and Disability Plan is offered in conjunction with the Pension Plan under Pastor’s Participation and Minister’s Choice and on a noncontributory basis outside of those packages.
Directors approved two new disability benefits and expanded the term life benefit, giving employers greater opportunity to offer critical financial protection to more employees.
In the event of a temporary disability, the new Temporary Disability Plan provides a financial protection benefit to employees equal to 60 percent of effective salary, capped at the IRS maximum ($285,000 in 2020). The plan covers up to 90 days of disability, with a 14-day waiting period before benefits payments begin. This plan is a noncontributory benefit for ministers enrolled in Pastor’s Participation and Minister’s Choice. Outside of those benefits packages, employers may offer it on a contributory or noncontributory basis to eligible employees.
The new Long-Term Disability Plan is a noncontributory option that offers financial protection for employees with a disability that extends beyond 90 days, providing 60 percent of effective salary, capped at the IRS maximum ($285,000 in 2020), throughout their disability. It cannot be combined with the Death and Disability Plan.
In addition to approving the comprehensive financial protection provided by the temporary and long-term disability options, Directors also expanded term life benefits. The Term Life Plan offers the same, low-cost coverage available in the 2020 Benefits Plan. But in addition to a fixed amount of coverage (from $5,000 to $50,000), it includes a new feature — an income-based benefit amount, equal to one times a member’s effective salary, up to $50,000. Under either option, employers pay the full cost of coverage.
Directors expanded eligibility for assistance programs beyond what this newsletter has reported for ministers (see New benefits package approved for ministers). Adoption Assistance and Transition-to-College Assistance will now be available for plan members enrolled for medical or pension benefits. Retiree Medical assistance will be open to retirees enrolled in the Medicare Supplement Plan as well as to eligible pensioners, spouses, and surviving spouses. All other eligibility requirements, such as household income, are unchanged.
The Board of Pensions has expanded support for African American Presbyterian congregations that are without an installed pastor. Effective immediately, these congregations may qualify for Pathways to Renewal with 300 or fewer members; generally, membership must be no more than 150. Pathways to Renewal brings young ministers into the Benefits Plan with the full benefits of Pastor’s Participation at substantially reduced dues.
Judith D. Freyer, Executive Vice President and Chief Investment Officer, reviewed the Board of Pensions Balanced Investment Portfolio within a framework of global economic and political events. Returns exceeded the 6 percent return target in all periods — 20-year, 6.3 percent; 15-year, 6.9 percent; 10-year, 8.6 percent; five-year, 7.3 percent; three-year, 9.8 percent; one-year, 17.8 percent.
The portfolio is the investment fund for the Pension Plan, Death and Disability Plan, Endowment Fund, and Assistance Program assets as well as for restricted gifts made to the Board of Pensions. On December 31, 2019, the portfolio had a market value of $10.2 billion. (See the 2019 Investment Review.)
Suzanne P. Welsh, Chair of the Investment Committee, provided an overview of the work of the Investment Committee on behalf of Benefits Plan members and their beneficiaries. Based upon the findings of the 2019 Asset-Liability Study, the Board approved the long-term strategic asset allocation ranges for the portfolio.
The Committee reviewed and approved initial targets of 10 percent in private equity and 5 percent in real estate. The Committee approved illiquid private partnership investments in private equity and real estate and an additional allocation to an international equity manager.
The Committee reviewed the asset allocation, investment performance, and costs of the investment options in the 403(b)(9) Retirement Savings Plan of the Presbyterian Church (U.S.A.) and the 401(k) New Covenant Retirement Savings Plan. The Committee reviewed the U.S. and international equity components of the Balanced Investment Portfolio and approved an emerging markets equity strategy.
The Board of Directors approved a 2 percent experience apportionment for the Pension Plan, in compliance with the Board of Pensions experience apportionment policy guidelines. The guidelines tie apportionments to the overall funded status of the plan, which was 123.8 percent at the close of 2019. They establish three goals:
The apportionment is effective July 1, 2020. The eighth in as many years, it results in an eight-year cumulative increase of 26.4 percent. In granting the apportionment, Directors recognized the continuing long-term performance of the Board of Pensions Balanced Investment Portfolio.
Plan members receiving disability benefits as of December 31, 2019, will receive a 2 percent increase in the benefit, effective July 1, 2020. Such increases are intended to prevent inflationary erosion of disability benefits.
After reviewing investment and actuarial experience, reserves, and inflation, Directors determined that the benefit increase was appropriate. Assets and liabilities of the Death and Disability Plan are evaluated independent of the other plans the Board of Pensions administers.
Directors amended the Pension Plan and Retirement Savings Plan of the Presbyterian Church (U.S.A.) due to the change in the required minimum distribution (RMD) age under the SECURE Act, signed into law December 20, 2019. The new law extended the RMD age from 70½ to 72 for plan participants who were not yet 70½ as of December 31, 2019.
The Board of Directors took action to elect, from among current Directors, the following individuals to serve as Board officers for one-year terms beginning at the conclusion of the 224th General Assembly (2020):
Fredric J. Bold Jr., Chairperson
Larry Palmer, First Vice Chair
Suzanne P. Welsh, Second Vice Chair
The Reverend Dr. Fairfax F. Fair will continue to serve as Board of Directors Chairperson through the conclusion of General Assembly.
The next meeting of the Board of Directors will be in Philadelphia July 16-18, 2020. For further information, email the Corporate Secretary or call 215-587-7600.