What pension & health benefits decisions face General Conference?

August 17, 2011

Delegates to the 2012 General Conference will have hundreds of pages to read and understand as they prepare to vote on items that will have lasting implications for the church and individuals who serve the church. The items relating to pension and benefit changes for United Methodist clergy are among the most complex pieces of legislation that delegates will consider. During March I attended a forum where information about expected legislation was provided to conference benefits officers and conference treasurers.

Here are some of the proposed changes:

  • Two alternatives will be proposed for the clergy pension plan, each projected to reduce retirement benefits and reduce costs.
    • Proposal One—continue with two components: a defined benefit and a defined contribution, similar to the Clergy Retirement Security Program but with a smaller defined benefit. This proposal is generally preferred by clergy plan participants and will be recommended by the general board.
    • Proposal Two—a defined contribution only. This proposal is offered in response to concerns about future unfunded liabilities in defined benefit plans and the ability of the denomination to sustain such plans into the future.
  • Ministerial Pension Plan annuities—exactly 65 percent of the MPP would be annuitized upon retirement. The rationale for this is to reduce the liability of conferences for the annuity contained in the MPP. (The annuity acts like a defined benefit plan and creates a liability.)
  • Pre-1982 pension plan Past Service Rate—remove the link to the Conference Average Compensation; add consideration of inflation in setting the PSR; require that any increase must be fully funded by the conference before implementation.
  • Comprehensive Protection Plan (death and disability plan)—add return-to-work incentives; change duration schedules; require longer service for the death benefit in retirement; and set a fixed amount for the death benefit of retired clergy and spouse (rather than a percentage of the Denominational Average Compensation). The fixed amount is higher than the current percentage of DAC and would be reviewed regularly.
  • CPP—amend to provide for voluntary transition benefits, such as severance pay and health insurance, to clergy who transition out of ordained ministry.
  • Modify Book of Discipline (¶¶639.6 and 639.7) to allow flexibility to respond to changes, such as the insurance exchanges in the health care reform act.
  • Require additional funding plans from the annual conferences.
  • Modify Book of Discipline (¶1506.26) to provide for a very complicated (in my opinion) method of providing health insurance in retirement to clergy who serve in more than one annual conference and/or a general board or agency.

These changes are proposals from the General Board of Pensions and require final approval from the GBOP board of directors this summer before they are submitted as legislative items to General Conference.

We also learned more about the proposed budget for the 2013–2016 quadrennium. The budget is expected to fall within a range from $2.4 million higher to $65.3 million lower than the 2009–2012 quadrennial budget. The budget will be recommended to the Connectional Table and the General Council on Finance and Administration in May 2011 with follow-up work, if needed, in July 2011.

Each of us should be informed about these issues but Minnesota’s delegates to General Conference will need to delve deeper into the proposals. Jean Edin, conference benefits officer, and I plan to meet with our delegation to fully discuss these proposals. Delegates will be provided with background information and gain technical knowledge about the pension plans and proposed changes. Delegates will consider how the changes will affect individuals, churches, and the conference with the objective of providing appropriate, affordable and sustainable benefits for the church and those who serve the church.

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

Minnesota Annual Conference of the United Methodist Church

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