Agency readies pension proposal for General Conference
3/26/2003 News media contact: Tim Tanton · (615) 742-5470 · Nashville, Tenn.
By United Methodist News ServiceThe
United Methodist Church's pension programs would be strengthened and
expanded under a proposal going to the denomination's top lawmaking
assembly next year.
Directors of the church's Board of Pension
and Health Benefits, meeting March 20-22 in Louisville, Ky., voted to
present the proposal to the General Conference. The assembly, which
gathers every four years, will meet April 27-May 7, 2004, in Pittsburgh.
board also affirmed the decision it made last November to change its
annuity conversion policy from a fixed rate to a variable market-based
rate this summer.
"The board's endorsement to proceed with the
new pension plan, coupled with an affirmation of its annuity conversion
policies, strengthens our ability to meet current and future retirement
processes to clergy and lay persons employed by the church," said
Barbara Boigegrain, top staff executive of the board in Evanston, Ill.
it goes to General Conference next year, the board will propose a
combined defined benefit and defined contribution core pension program
for clergy that would begin Jan. 1, 2007. The defined benefit piece
would provide a monthly payment in retirement. The defined contribution
part would provide an employer contribution equal to 3 percent of a
Annual conferences also would be able to
offer an optional defined contribution plan along with the core
benefits. The additional defined contribution benefit could include
matching contributions of up to 6 percent of compensation and a variety
of distribution options, such as cash installment payments, lump sum
distribution, and annuity conversion through an insurance company or
mutual fund organization.
For lay workers of the church, the
board affirmed a recommendation for a new, mandatory pension plan. The
plan would provide benefits to lay workers in local congregations - such
as secretaries, choir directors and musicians - and extension
ministries. General agency and annual conference lay workers are already
covered by the board's existing plans.
With the new defined
contribution plan, sponsors would be expected to contribute 3 percent of
each enrolled employee's compensation to the program. "If passed by the
General Conference for implementation January 2007, it will be the
first time lay workers would be able to receive uniform retirement
benefits across the nation," the agency said in a press release.
is being prepared for the proposal to General Conference. The board
will vote on the plan document when it meets in July, said spokesman
The agency also is developing a "broad-based
communications" plan to help the church understand the proposed changes,
Lee said. The plan will include meeting with small groups of people
that represent constituencies within the denomination, he said.
the board meeting, the directors affirmed their new annuity conversion
policy. Effective July 2, retirees who elect to convert their pension
account balances to annuities will do so at a floating, market-based
rate instead of at a fixed rate. Clergy members who have reached age 62
or 35 years of service will be "grandfathered" in with the fixed rate,
an exception based in part on the "unique covenant relationship" between
the church and its clergy, as well as the fact that clergy must convert
to annuities upon retirement, while lay retirees have other options
With a current fixed rate of 8 percent and market
rates in the 5 to 6 percent range, the board has been paying
above-market returns on annuities. That money has been coming out of
"The board carefully considered requests from
leadership of two general agencies to change the timing and scope of
converting retirement account balances for staff from a fixed 8 percent
annuity conversion rate to a market-related variable conversion rate,"
the agency reported. "Upon careful study and reflection, the board
determined that the original decision best upheld the interests of the
greatest number of people."
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