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. This Bulletin reports key information presented and actions taken at the spring 2017 meeting that affect plans and programs administered by the Board of Pensions.
The Board of Directors approved a 2 percent experience apportionment for the Pension Plan, effective July 1, 2017. The apportionment, the fifth in five 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.
As of December 31, 2016, the Pension Plan was 123.7 percent funded.
An experience apportionment is a lifelong increase in pension benefits or credits, depending on employment status:
The Directors annually review plan reserves and other data. Experience apportionments are not guaranteed to be granted each year.
The Directors granted a disability benefit increase of 2 percent for members receiving disability benefits on December 31, 2016. The increase, effective July 1, 2017, 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.
Disability benefit increases are not guaranteed to be granted each year.
At the March 10 meeting of the Investment Committee, Judith D. Freyer, Executive Vice President and Chief Investment Officer for the Board of Pensions, reviewed the Board of Pensions Balanced Investment Portfolio’s 2016 investment performance of 8.95 percent within the framework of global economic and political events that resulted in volatile investment performance for many asset classes. The Balanced Investment 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, 2016, it had a market value of $8.6 billion. The 2016 Investment Review provides details of the portfolio’s 2016 investments and performance.
Ms. Freyer also presented the Board’s investment strategies for 2017, and the Reverend Dr. Lindley G. DeGarmo, Chair of the Investment Committee, provided an overview of the work of the Investment Committee on behalf of the members of the Benefits Plan and their beneficiaries.
The Committee confirmed that the December 31, 2016, asset allocation of 37.3 percent in U.S. stocks, 19.6 percent in international stocks, 28.9 percent in fixed income, and 14.3 percent in other assets is in compliance with the long-term strategic asset allocation. 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 the current long-term strategic asset allocation ranges for the Balanced Investment Portfolio.
The Committee also reviewed the alternative investment component of the portfolio and approved a limited partnership commitment to an existing partnership relationship for private equity investments in Asia.
The Investment Committee approved retaining Impax Asset Management as an environmental sustainable global equity manager for the Board of Pensions Balanced Investment Portfolio. Details will follow in a Board of Pensions press release Monday,
March 13.
The Committee approved committing funds to the Impax Leaders Strategy, a fossil fuel-free portfolio that invests worldwide in resource efficiency and environmental markets. The Leaders Strategy mirrors the Pax Global Environmental Markets Fund strategy of fossil fuel-free investing, but also includes a role as a proactive investor in companies worldwide that produce products or create solutions to drive positive environmental performance, such as in alternative energy, waste management, water, and sustainable agriculture.
Impax is the sub-adviser to the Pax Global Environmental Markets Fund, which was added to the Retirement Savings Plan of the Presbyterian Church (U.S.A.) as an investment option January 1, 2017, enabling church workers to invest in companies working to have a positive environmental impact.
The Audit and Compliance Committee received a report from Rosemary A. Gallagher, Controller, on the 2017 Enterprise Risk Assessment. Michael F. Fallon Jr., Executive Vice President and Chief Financial Officer, provided a summary for the full Board of Directors.
The purpose of an enterprise risk assessment is to identify, assess, measure, and devise ways to limit exposure to potential strategic, operational, financial, and regulatory risks as well as to maximize opportunities. The Board of Pensions periodically conducts a new enterprise risk assessment and then regularly reports to the Committee its progress in monitoring and managing the risks.
Enterprise risk management has always been important to the Board of Pensions, as it enhances organizational performance by linking strategy and business objectives to both risk and opportunity. The Board’s 2017-2018 Strategic Vision and the redesigned Benefits Plan were key considerations in developing the Enterprise Risk Assessment.
The current assessment identifies the volatility of the global investment markets, the viability of the Medical Plan, information technology infrastructure, and data and cybersecurity as posing the greatest potential risks to the Board’s ability to fulfill its mission long term.
The following Directors were elected to serve as Board officers for the upcoming year:
According to the bylaws, officers are elected annually. Directors are elected by the General Assembly and may serve up to two consecutive four-year terms on the Board of Directors.
The Board of Directors approved the election of the following senior officers to the Board of Pensions Leadership Team:
Mr. Batezel and Ms. Schrieber joined the Board of Pensions March 6, 2017.