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, reporting on actions taken at the meeting. This Bulletin reports key information presented and actions taken at the summer 2016 meeting that affect plans and programs administered by the Board of Pensions.
In accordance with the bylaws of the Board of Pensions, the second meeting of the Board of Directors of the year is to be the annual meeting at which the audited financial statements are distributed. The July 9, 2016, meeting of the Board of Directors was the annual meeting, during which the
2015 audited financial statements were distributed to the full Board of Directors.
2017 Benefits Plan Updates
January 1, 2017, ushers in a more flexible approach to providing benefits in the Presbyterian Church (U.S.A.), when the 2017 Benefits Plan takes effect. Anchored in
A Theology of Benefits, the 2017 Benefits Plan honors the Church’s commitment to teaching elders while seeking to cover more church workers as part of a transformational process to serve more, serve better, and serve the Church.
After months of study, the Board of Directors of the Board of Pensions approved the 2017 Benefits Plan
at its March 2016 meeting. For a high-level look at this plan, see
Overview of the 2017 Benefits Plan.
At the Board meeting just ended, the Directors approved several amendments, or updates, to the 2017 Benefits Plan. These amendments, outlined below, affect active members only.
Medical Plan Provisions
For 2017, the Medical Plan has two options — a PPO and an EPO — the availability of which depends on employer choice and employee role (installed pastors must be enrolled in the PPO). Benefits and member cost-sharing obligations for 2017 will differ depending on the medical option selected.
During their July 9 meeting, the Directors approved amendments to the 2017 Medical Plan to
establish a telemedicine copay of $10 for members enrolled in either the PPO or EPO medical option; and
set a reimbursement limit of $2,500 every three years
for hearing aids and fittings for members enrolled in the PPO medical option.
The Directors also approved the following changes to prescription drug benefits in response to members’ desire for greater flexibility in filling maintenance medications:
the addition of a 90-day retail-pharmacy refill option (PPO and EPO)
no surcharges for maintenance medications filled at a retail pharmacy (PPO and EPO)
In addition, in response to rapidly rising drug costs, the PPO medical option will see
an increase in the annual family prescription drug copayment maximum to $3,000 for 2017.
Members will receive information about the 2017 PPO and EPO medical options in the coming months.
Death and Disability Plan Provisions
The Directors approved an amendment that enables members to enroll their eligible children in supplemental death benefits
until age 26 for consistency with Medical Plan provisions. They also approved several administrative amendments to the 2017 Death and Disability Plan to clarify existing provisions.
Dues Action for Medicare Supplement Coverage Deferred
Board staff and the Medical Plan’s actuary, Milliman Inc., presented a summary of historical actuarial forecasts for Medicare Supplement coverage and an analysis of the plan’s more recent medical and prescription drug experience, in which they noted trend volatility and continued Medicare Part D subsidy income uncertainty.
The Healthcare Committee recommended that staff be authorized to establish the 2017 Medicare Supplement subscription charges for all participants in the fall so that rates can be set using the most up-to-date information possible. The Committee stipulated that, absent further approval, any dues increase for 2017 Medicare Supplement coverage may not exceed $20 per participant per month.
Consultant and Counsel Engagements and Service Provider Contracts Approved
The Directors continued the designation of the following advisers:
- Deloitte and Touche LLP, for independent audit services
- Willis Towers Watson, for pension actuarial counsel
- Milliman Inc., for medical actuarial counsel
- Ballard Spahr LLP, for legal counsel
In addition, contracts with the following Medical Plan service providers were signed:
- OptumRx (formerly Catamaran), for pharmacy management services (three years)
- GeoBlue, for medical coverage of Worldwide Mission personnel (one year)
Balanced Investment Portfolio Returns 2.8% for Five Months Ended May 31, 2016
The Reverend Lindley G. DeGarmo, Chair of the Investment Committee, provided an overview of the work of the Committee on behalf of members of the Benefits Plan and their beneficiaries.
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 July 8, 2016, meeting, the Committee reviewed the alternative investment component of the Balanced Investment Portfolio, to include limited partnership investments in private equity, distressed debt, and venture capital.
The Committee had educational forums on investing in private equity and investing in distressed debt. The Committee approved commitments to one limited partnership for private equity and one for distressed debt.
The Committee affirmed the long-term strategic asset allocation ranges approved by the Board of Directors and affirmed that the May 31, 2016, asset allocations of 36.3 percent in U.S. stocks, 19.6 percent in international stocks, 30.2 percent in fixed income, and 13.9 percent in other assets were within the approved ranges.
Judith D. Freyer, Senior Vice President, Treasurer, and Chief Investment Officer, reviewed the 2016 year-to-date performance of 2.8 percent within the framework of global economic and political events that resulted in volatile investment performance for many asset classes. The Balanced Investment Portfolio exceeded the 7 percent long-term investment return assumption for the 20 years ended May 31, 2016, but fell short for the 10 and 5 years ended the same period.
The Balanced Investment 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 May 31, 2016, the portfolio had a market value of $8.327 billion.
New Directors Join Board of Directors
Seven new Directors, bringing diverse demographic backgrounds and professional expertise to their roles, were welcomed at the July 2016 meeting of the Board of Directors and assigned or elected to serve on the committees below:
|Mary C. "Molly" Baskin||Chicago, Ill.|| Audit and Compliance
|Adam Ceteznik||Seattle, Wash.|| Audit and Compliance
|Margaret Fox||Jeffersonville, Ind.|| Board Development and Governance* |
|Kathy Lueckert||Prairie Village, Kan.|| Assistance and Church Engagement
David C. McBride||Wilmington, Del.|| Audit and Compliance
Suzanne P. Welsh||Swarthmore, Pa.|| Board Development and Governance*
|Rev. Floyd White III||Camden, N.J.|| Assistance and Church Engagement
*Elected to serve on this committee by the Board of Directors
Elected by the 222nd General Assembly (2016), the new Directors replace members of the outgoing Class of 2016, whose terms expired at the conclusion of the General Assembly (see
The Board Bulletin, Spring 2016).
Questions or Comments?
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Philadelphia, PA 19103-3298
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