PHILADELPHIA — A
near-record-breaking 27.5 percent investment return for 2003 has
enabled the Presbyterian Church (USA)
Board of Pensions (BOP) to replenish its contingency reserves
while granting a 2 percent increase in pension benefits for active
and retired plan members and their survivors.
The 2 percent “experience apportionment” is a permanent
increase in the payments to retired church workers and survivors
and in the pension credits of active members. The increase goes
into effect on Aug. 1.
During a meeting on March 6, the BOP also approved a 4-percent
raise in disability benefits of members receiving such benefits
as of Dec. 31, 2003.
The board’s investment portfolio experienced a cumulative
loss of more than 17 percent from 2000 to 2002 because of a sharp
downturn in financial markets.
“We must remember that the 27.5 percent gain (in 2003)
only brings us back to the asset level we were at two years ago,
while our liabilities have continued to grow,” said Earldean
V.S. Robbins of San Francisco, the BOP chair.
“Reserves are important, because we have no alternative
funding sources,” said Anna Hoover, vice-president for retirement
benefits. “Dues are only a drop in the (assets) bucket and
cannot bail us out. We have no insurance, no government fallback,
no assets to sell off. Reserves are all we’ve got.”
Medical costs still climbing
After two years of substantial losses — of $7.2 million
in 2001 and $3.8 million in 2002 — the Medical Plan’s
fund balance improved by $4.1 million in 2003, to $35.5 million,
or 27.2 percent of total plan expenses. BOP guidelines call for
a fund balance (reserve) of 20 percent to 33 percent of expenses.
BOP officials traced the improved finances to dues increases
in 2002 and 2003, benefits changes that helped the bottom line,
and lower-than-expected inflation in health-care costs last year
— of 8.1 percent rather than the expected 10 percent to
12 percent.
Yet dues are still not keeping up with costs. “Despite
the slight improvement in trends, health-care costs will continue
to rise, and are likely to require a half-percent increase in
the medical dues for 2005,” said John Cookson, the board’s
Medical Plan actuary.
Any changes in dues will be considered at the board’s
July meeting.
Other business
The board also:
- Established the first day of the month as the beginning day
for all retirement and survivor pensions and the issuance day
for pension checks, effective July 1, 2005.
- Extended the Seminary Debt Assistance Program, which helps
first-call pastors serving small churches pay off their educational
loans, through Dec. 31, 2007.
- Approved an overture calling for reimbursement of some adoption
expenses, provided that adequate funding becomes available.
- Reviewed an expanded preventive-health benefit for adopted
children of international origin, effective June 1.
- Approved the report of its Task Force on Clergy Recruitment
and Retention, which will be submitted to the 216th General
Assembly this summer.
- Reelected Robbins as chair; the Rev. Arthur Sundstrom, pastor
of Chevy Chase (MD) Presbyterian Church, as first vice chair;
and elder Ann C. Petersen of Chicago as second vice chair.
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