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.”
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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