Pension update from General Conference 2012


August 29, 2012

What happened at General Conference 2012? It depends on who you ask. If you ask a conference treasurer or benefits officer, they will mention some of the changes in the area of clergy pensions and benefits.

It’s important to know that for those already retired, pension benefits will not change. Active clergy will not lose any pension benefits already accrued. Whatever your age or status in regard to retirement, the good news about pension funding is that the United Methodist Church has taken steps to help assure a sustainable pension plan into the future.

The Minnesota Conference remains well positioned with a projected 145 percent funded status in the pre-1982 plan. The entire UMC is projected to be over 100 percent funded in both the Ministerial Pension Plan (MPP) annuities and the Clergy Retirement Security Program (CRSP) Defined Benefit. The Minnesota Conference has other assets outside of the pension plan that are designated to backstop retirement benefits for clergy.

The CRSP plan was modified or “restated” by General Conference. The restated CRSP retains both a defined benefit and defined contribution component but benefit and contribution levels going forward were reduced. Also added was a partial match for clergy contributions designed to encourage folks to save for their retirement.

Starting in 2014, a married participant who chooses a continuation of spousal benefits after his or her death will have a reduced benefit to offset the value of spousal benefits. Currently married retirees receive benefits of greater value than unmarried retirees. This change equalizes benefits between married retirees and unmarried retirees. Another change with both the restated CRSP and the MPP will allow a disabled adult child to be named as a secondary contingent annuitant.

Annuitization of your MPP account at retirement must be exactly 65 percent starting January 1, 2014. This change is intended to reduce the possibility of required future contributions from the conferences to fund the MPP annuities.

Pre-1982 plan changes

The pre-1982 plan also had changes. These include dropping the requirement that the Past Service Rate (PSR) must be maintained at 0.8 percent of the Conference Average Compensation or higher and that increases in either the PSR or contingent annuitant percentage must be fully funded by the conference in advance.

Conferences will notice changes such as a priority order for applying required contributions if they make partial payments. This change will apply payments to the older plans first—Pre-1982, MPP, CRSP. Conferences that merge may retain different PSR and/or contingent annuitant percentages for each pre-merger conference.

Comprehensive Protection Plan changes

The Comprehensive Protection Plan (CPP) also had some changes. The changes include a limit benefits to 24 months for “treatable” and “returnable” mental nervous disorders and enhanced return-to-work incentives. The retiree death-benefit eligibility under CPP will require increased number of years of service and the years will be increased by one-year increments between 2013 and 2019. The death benefit for retired clergy, spouses, and surviving spouses changes to a fixed dollar amount rather than a percentage of the Denominational Average Compensation (DAC). This change provides a higher death benefit than what the current percentage of DAC would be. There is also a voluntary transition program that provides severance pay and other benefits (subject to conference approval) for eligible clergy who surrender credentials.

We await the details of how these and other changes will be implemented. Once those details are available, Minnesota Conference will evaluate billing methods and other administrative details.

The General Board of Pension and Health Benefits has prepared a brochure that highlights changes from the 2012 General Conference. It is available on its website www.gbophb.org, click on General Conference 2012 (lower left). You will then see a link to the brochure and other items.

Barbara Carroll is director of finance and administration for the Minnesota Annual Conference.




Minnesota Annual Conference of the United Methodist Church

122 West Franklin Avenue, Suite 400 Minneapolis, MN 55404

info@minnesotaumc.org

(612) 870-0058