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Board of Pensions: no 2012 experience apportionment

Economy improves but not enough, officials say

March 28, 2012

PHILADELPHIA

For the fourth consecutive year, the Presbyterian Church (U.S.A.)’s Board of Pensions says it cannot afford an “experience apportionment” for Pension Plan members in 2012.

“The Pension Plan is fully funded to meet current liabilities,” said Frank James, III, chair of the Pension Committee, in a statement released by the board,  “but there are insufficient excess reserves to grant an experience apportionment. The Committee requested I convey its collective regret that this is the case.”

An experience apportionment is a percentage increase in pension credits for active plan members and a percentage increase in pension benefits for retired plan members. Experience apportionments ― calculated on the basis of the BOP’s investment and actuarial experience and level of reserves ― are unique to the PC(USA) plan.

“Despite continued improvement in 2011,” James told the board at its March 1-3 meeting here, “Pension Plan reserves did not improve to the degree set by the Board’s experience apportionment policy.”

The board granted  a disability benefit increase of 3 percent for disabled members receiving disability benefits on Dec. 31, 2011. This increase ― calculated differently from other BOP plans ― which takes effect July 1, 2012, will help offset the cost of inflation.

Investments: volatility is the word

The wildly fluctuating U.S. financial markets worked to the BOP’s favor in 2011…barely. Anne S. Drennan, chair of the Investment Committee, reported that the board’s balanced portfolio realized a 0.6 percent return for the year just ended.

She said performance for the first six months of  2011 was a positive 5.3 percent, followed by a negative return of 9.4 percent in the third quarter and a rebound of 5.5 percent in the fourth quarter of 2011.

At the end of the year, the portfolio had a market value of $6.8 billion.

Medical Plan: whither healthcare reform?

“Healthcare reform is the key driver,” Vice-President for Benefits Patricia Haines told the BOP’s Healthcare Committee. “The feedback has been generally positive for us.”

Michael J. Fallon, the board’s vice-president for finance and accounting, said, “At the end of the day the numbers tell the same story ― revenue is down and expenses are going up.”

The board’s Medical Plan finished 2011 with a net loss of $12.2 million, with enrollment declining 1.5 percent and expenses increasing 3.9 percent.

Nevertheless ― due in part to a Medical Plan dues increase of 0.75 percent in 2012 and another 0.75 percent in 2013 ― reserves stood at 40.1 percent of liabilities at the end of the year. Those reserves are projected to decline gradually over the next three to four years. Board policy requires a minimum reserve level of 20 percent.

“There has been very little negative feedback on the dues increase, though we know there’s worry out there in the church,” Haines said. “They seem to understand what we’re trying to do.”

The BOP has seemingly done an effective job of implementing provisions of the Affordable Care Act … and has received some federal subsidies that have helped many plan members.

The board has already implemented provisions extending care to the children of plan members up to age 26, removed lifetime benefit maximums for medical, surgical, and prescription drug coverage, and amended the plan to cover children younger than 19 who have pre-existing conditions, among others.

Staff has also made employers aware of and provided informational support for the Small Employer Healthcare Tax Credit, which for many churches has more than offset dues increases.

Other subsidies have enabled cost-savings in the BOP’s participation the federal Early Retiree Reinsurance Program, or ERRP, and Medicare Part D (by converting to Medicare Part D in 2011, the board qualified for a $10 million subsidy to help underwrite its program).

Complete information about the BOP’s efforts in response to healthcare reform is available at www.Pensions.org/healthcarereform.

Vendor contracts renewed

The board renewed its contract with:

  • Highmark Blue Cross Blue Shield for Medical Plan administration
  • Active Health Management for healthcare management services
  • Cigna Mental Health for mental health services
  • Express Scripts for prescription drug services

Officers elected

The board elected officers, who will serve from the conclusion of the upcoming 220th General Assembly (July 7) until the start of the board’s meeting on June 29, 2013. They are:

  • Chair ― Thomas C. Paisley, Jr.
  • First vice-chair ― John W. Hamm
  • Second vice-chair ― Judith A. Harris
  1. My husband, a Presbyterian minister is now in a nursing home and I am hunting for the letter which says that his pension may be justified as housing allowance which helps with our income tax. This is my first time to wade through this by myself. Thanks for your help. Nancy Mellon 386-673-5493

    by Nancy Mellon

    January 15, 2013

  2. I first ran into the problem here in Paris, Texas when First Presbyterian Church fought the ordination of gay preachers. That was nearly 40 years ago, and the two congregations continue on...the old one rich with money but few members; the new one stable but poorly financed.

    by Skipper Steely

    April 5, 2012

  3. So . . we can afford to pay medical benefits for same-sex sin, but we can't give faithful clergy a better retirement? Interesting - but stupid!

    by Michael Neubert

    April 3, 2012

  4. The article states "There has been very little negative feedback on the dues increase, though we know there’s worry out there in the church,” Haines said. “They seem to understand what we’re trying to do.” - fine. We BOP members are mostly understanding about apportionment increases. We're grateful to get them when they come and are understanding when they don't come. However, I would like to give some negative feedback on this article. It's not honest. It blames the economy and health-care reform alone but the writer, BOP, and PCUSA, avoid two key issues affecting the situation: 1) the enormous departure of ministers, churches, and members of the PCUSA due to a theological abandonment of orthodoxy and 2) the pension dues needing to cover same-sex partnerships. The BOP has said that the latter will not affect dues when what they really mean is that it "will not immediately" affect dues. Can we ask for another try on reporting this news accurately? Or should we continue to hear biased reporting from the denomination and an avoidance of all the facts?

    by Ross Purdy

    April 2, 2012

  5. PCUSA progressives might want to take a minute to think about just what happens to the finances of the denomination when conservatives and traditionalists feel they have to leave and find a new home to live out their deeply held faith. You don't have to be a math major or an analyst to understand Pension and Medical plans are threatened and premiums rise when the number of people paying into the plan shrinks significantly. Or that a growing exodus of both members and congregations means fewer opportunities for new ministers, less money for missions, and for everything else. It's probably asking far too much to expect those who have just consolidated power (liberals) to stop and think analytically and dispassionately about the likely financial impacts of the next policy change (same sex marriage, e.g.) they intend to impose. Which is why ministers in their 30's, 40's, 50's, and 60's will likely lead the way when they start asking "Will the PCUSA really be able to pay my pension in 30 years when the denomination is down to 1 to 1 1/2 million members and 25-50% of our congregations have closed, departed, or are on life support." The answer is probably not, by the way. At least at current levels.

    by Tome Walters

    March 29, 2012

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