Ensuring stability for members across the Benefits Plan
Strong, long-term performance of the Balanced Investment Portfolio, coupled with the Board of Pensions’ careful management of the Benefits Plan of the Presbyterian Church (U.S.A.), continues to provide stability for members across the plan. This stability comes in the form of pension payments for retired members, income security for members receiving disability benefits, and need-based grants available through the Assistance Program. Additionally, designated allocable assets within the portfolio contribute to dues subsidies that help alleviate the costs of medical coverage for pastoral leaders enrolled in dues packages.
“The Balanced Investment Portfolio’s performance plays a critical role in our ability to support members,” said Donald A. Walker III, Executive Vice President & Chief Investment Officer. “It is through our long-term and consistent stewardship that we can provide ongoing stability across plans.”
Plan stability through a healthy portfolio
The Balanced Investment Portfolio has historically performed well during long periods of favorable market conditions, but market dynamics play a secondary role to the more significant driver of the portfolio’s health: the discount rate used to determine the value of future benefits.
As interest rates rise, which has been the case over the last several years, the expected future liabilities or obligations that the Balanced Investment Portfolio supports decline. This creates a greater effect on the funded status of plans within the portfolio than investment performance alone.
A unique feature of the Defined Benefit Pension Plan is the granting of experience apportionments. These increases, which are tied to the pension plan’s funded status, result in permanent increases in pension credits for active members and increased payments throughout retirement. As of Dec. 31, 2025, there are more than 22,500 retired members and surviving spouses who receive a pension through the Board.
At the March Board of Directors meeting, Directors approved a 7.2% experience apportionment, effective July 1, 2026, making it the largest apportionment granted since 1999 and the 14th consecutive apportionment, yielding a cumulative increase of 64.4% since 2013.
“We take very seriously our ability to provide a steady and reliable source of income to our pensioners,” said John Matekovic, Vice President, Income Security. “Knowing that the work we do at the Board results in peace of mind for those who served the Church is very meaningful for all of us.”
The pension plan’s overall funded status influences the Board’s decisions on apportionments and informs its apportionment policy. This policy is designed to maintain the solvency of the plan while providing consistent apportionments that protect our retirees from the effects of inflation over time.
“Thirty years ago, a formal policy didn’t exist, and it created unpredictable outcomes for pensioners,” Mr. Matekovic said. “Implementing a thoughtful, strategic policy to maintain the health of the pension plan, and revising it when appropriate, is part of our commitment to those we serve.”
Different plans, different funding
While the Balanced Investment Portfolio maintains a well-funded status, with a valuation of $12.9 billion for the period ending Dec. 31, 2025, and dues for the Defined Benefit Pension Plan have remained stable over the years, the unpredictable healthcare market and rising costs have led to dues increases for the Medical Plan. The difference between dues for these plans has led to questions about how pension funds could offset costs of the Medical Plan.
“It can be confusing to see the pension plan performing strongly while the Medical Plan dues have increased,” said Todd Ingves, Vice President, Health & Well-Being. “But the Medical Plan is a pay-as-you-go plan that is largely dependent on dues revenue. We have limited assets available, and their allocation plays a big part in how we address rising costs of medical coverage.”
Pension dues received by the Board are held in trust solely for the benefit of pension plan participants and are combined with redemptions from the Balanced Investment Portfolio every month to pay benefits. These funds are legally protected and cannot be used for any other purpose. “Current law prohibits comingling or redirecting funds for other purposes,” said Mr. Walker. “It is the Board’s responsibility to not only uphold these laws, but also to manage pension assets appropriately so that we fulfill our promises.”
But certain allocable assets — not pension assets — can be transferred and become accessible for specific uses designated by the Board of Directors. These allocable assets act as additional reserves that help manage the inherent volatility of healthcare costs, and are how the Board funds medical coverage subsidies within the dues packages.
Reserves are used when Medical Plan dues cannot cover that year’s claims and administrative expenses. “These provide a buffer against unexpected costs to ensure the stability and continuity of the plan, but they are not designed to support losses for extended periods,” said Mr. Ingves. “This makes the accuracy of medical trend predictions and cost management imperative.”
Managing costs in the Medical Plan
The Board of Pensions remains committed to providing benefits that support the holistic well-being of its members while at the same time managing the costs of medical coverage. As a nonprofit, the Board continually looks for ways to support congregations and their pastoral leadership so that ministers and their dependents have medical coverage.
“It becomes a balancing act,” said Mr. Ingves. “Consistent monitoring of medical trend, partnerships with other denominations when purchasing services, and underwriting benefits at zero profit all contribute to cost management for pricing the Medical Plan.”
To alleviate dues for congregations and pastoral leaders, income-sensitive dues within the Congregational Pastors Package and Transitional Pastor’s Participation provide inherent subsidies. Congregations pay dues based on effective salary, with minimum and maximum dues amounts providing guardrails: lower salaries result in lower dues. This dues structure enables lower-resourced congregations to provide medical benefits to pastoral leaders below the actual costs of coverage.
Additional subsidies were approved at the March Board of Directors meeting for these dues packages beginning Jan. 1, 2027, along with a new reserve fund to support new and existing subsidies with allocable assets from the Balanced Investment Portfolio.
“The Death, Disability & Life Plans invested with the Balanced Investment Portfolio remain well funded and capable of providing subsidies as a transferrable amount determined annually for the Medical Plan,” said Mr. Matekovic. “We work closely with our Investments and Finance teams to determine how certain assets from the portfolio can support dues subsidies.”
“Faithful stewardship and accountability of the funds entrusted to us remain paramount at the Board,” said Mr. Walker. “We feel very fortunate to be positioned to provide stability for Benefits Plan members.”
