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Economy forces cutbacks in missionary pensions

New missionaries are commissioned at a March 2008 worship service held
during the United Methodist Board of Global Ministries meeting in
Stamford, Conn. A UMNS file photo by Cassandra Heller.

A UMNS Report
By Linda Bloom*
June 30, 2009 | NEW YORK (UMNS)

For decades, United Methodist missionaries were rewarded for their years of faithful service – usually at a minimal salary – with the assurance that they would be fully cared for during their retirement years.

But during this period of global economic decline, when employers from organizations ranging from AARP to Xerox have eliminated or reduced contributions to retirement accounts, what missionaries receive in retirement is changing.

The Rev. James Dwyer, 63, and his wife, Helen, 64.
A UMNS photo courtesy
of the Dwyers.

Last year, the Collins Pension and Health Plans for retired United Methodist missionaries, administered by the denomination’s Board of Global Ministries, lost $33.3 million. In response, the church agency’s board of directors approved changes to the plans at the end of April.

The result: more out-of-pocket expenses for supplemental health care, starting July 1, a reduction of benefits for early retirement for those with less than 25 years of service and a pension rate determined by a purchasing power index and country of citizenship.

The Rev. James Dwyer, 63, and Helen Dwyer, 64, veterans of service in Germany and Austria and current board employees, reached the 25-year mark in 2009.

When they retire, the Dwyers will be exempt from some of the changes in the pension plan, but will feel the impact of the reduction in supplemental health benefits. “It’s a matter of feeling a bit less cared for, anticipating that,” he said.

“I think the issue for missionaries in general is we have operated under a system in which we’ve always been underpaid” compared to pastors and agency staff, Dwyer said. The hopes were that by the time of retirement, “there would be a very sufficient retirement program in place.”

Necessary action

Roland Fernandes, the mission agency’s staff treasurer, said the program is still sufficient. He said that the decline in investments, coupled with recent pension legislation, prompted the changes.

As board directors were reminded in April, the new legislation requires the agency, as sponsor of the Collins Pension and Health Plans, to put unfunded liabilities – the difference between the value of assets and the estimated amount of what is to be paid to retirees -- on its books. In the past, such liabilities could be charged over a long period of time.

Booking costs of $41.4 million for the plans in 2008, far higher than any other year, “totally wiped out our reserves,” Fernandes said.

As of Jan. 1, the pension plan had $20.2 million in unfunded liabilities and $80 million in assets. The ratio was much higher for the health plan, which had $10.9 million in unfunded liabilities and assets of less than $22 million.

Fernandes also noted that income from the Collins Forest, which funds the plans, had dropped from almost $8 million annually over the past five years to $2.2 million in 2008 and could go as low as $1 million this year.

The reason behind that decrease is the decline in the housing market. “Wood prices are the lowest in 30 years,” he explained. “It is definitely impacting us and the plans and I think it is something that is not going away soon.”

Economic implications

The United Methodist Missionary Association understands the economic crisis, but had hoped for reconsideration of some of the changes and a longer period of notice before the revised health benefits took effect.

“The people who are going to be affected more are the people in midstream, who haven’t got to the time of being vested in retirement,” said the Rev. Jim Gulley, a former missionary who serves as the association’s chairperson, adding that the 1 percent penalty for early retirement “is an incentive for people to stay on until 65.”

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Gulley and his wife, Nancy, served two terms of missionary service in Nigeria. Both turned 62 last year and she took early retirement. She now receives $316.25 per month, before taxes, for her eight years of service.

Gulley, who served a bit longer and currently is a consultant for the United Methodist Committee on Relief, would now face a 1 percent penalty if he retired early.

Two missionaries -- Richard Vreeland and the Rev. Bruce Griffith – were part of the committee considering the pension changes. Vreeland said he felt that their presence added some balance, even though he had no formal vote.

Despite that representation, the association remains concerned about the fact that the new pension rate will be linked to the missionary’s country of citizenship at the time of first employment.

With some 40 percent of United Methodist missionaries now coming from outside the United States, the association fears the new plan is not equitable. “It gives the appearance that people who are from developing countries are going to bear the burden of the change,” Gulley said.

Dwyer added that the missionaries he’s talked to find the idea of basing pension income on citizenship “a difficult pill to swallow.” The notion of creating such differences among the retired missionary community “goes against the grain for a lot of us,” he said.

Based on citizenship

Fernandes does not think the new system will be inequitable. “I do not believe it creates two levels of missionaries,” he said. “It’s citizenship, period. It’s not U.S. and non- U.S.”

Roland Fernandes says declines in investments, coupled with recent pension legislation, prompted changes to the missionary retiree benefits. A UMNS file
photo by Cassandra Heller.

Under the old plan, missionaries received a fixed amount based on each year of service. This year’s amount, a $25 increase over 2008, is $495. The new plan, effective in 2010, is based on the Gross Domestic Product Purchasing Power Parity index, which is pegged to the same standard of living across all countries. “If the index goes up, as it will each year, the pension will go up,” he explained.

Griffith, who works for the board as a mission personnel executive, said the new plan “is an attempt to try to relate it (pension) to where everyone’s home is,” rather than the old North American model. “It does allow for changes if someone changes citizenship,” he added.

In the future, the number of missionaries using the pension plan and the amounts they receive will decline. “The lengths of service generally are shorter today than they once were,” Griffith pointed out.

Despite the differences between the missionary community and board executives, Gulley said he was heartened by the positive tone of a June 2-3 meeting that he and Nan McCurdy, the association’s secretary, had with the Rev. Edward Paup, the board’s top executive, and the Rev. Edith Gleaves, head of mission personnel.

Gulley believes the missionary community has been somewhat marginalized by the board in recent years. “We have been arguing all along that the mission enterprise of The United Methodist Church should not just view missionaries as employees but an integral part of the mission work we are doing,” he said.

The association is pleased that West Ohio Bishop Bruce Ough, president of the Board of Global Ministries, has appointed a missionary to serve as an observer on each of three board task forces related to the planned restructuring of the agency, he added.

*Bloom is a United Methodist News Service news writer based in New York.

News media contact: Linda Bloom, New York, (646) 369-3759 or newsdesk@umcom.org.  

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