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PENSION & BENEFIT PROGRAMS

April 19, 2012

 

One of the proposals coming to the General Conference (GC) this year is a change in the clergy pension plan that was approved by GC just 8 years ago.  That plan, the Clergy Retirement Security Program (CRSP), is a hybrid defined contribution (DC) and defined benefit (DB) pension plan that is administered by the General Board of Pension and Health Benefits (GBPHB).  For an explanation of that plan, please see http://www.gbophb.org/retirement/crsp.asp.

Within just a couple years of the implementation of the CRSP plan, the 2008 stock market crash occurred, resulting in significant losses in the assets of all of the denominational pension plans.  The perhaps more significant and longer-lasting effect of that market crash was a realization on the part of the GBPHB and Conference leadership (particularly Conference Benefits Officers and Treasurers) that this plan was not sustainable by our local churches as currently structured.  Many Annual Conferences (including the Wisconsin Conference) that had been fully funded in their Pre-1982 pension plan found themselves having to once again pay contributions into that pension plan.  And all Annual Conferences found themselves not only having to pay in higher amounts for CRSP, but also, for the first time ever, having to pay in funds because of losses in the Ministerial Pension Plan (MPP) Annuities.

In response to the funding crisis that these required payments created for many Annual Conferences, GBPHB instituted a two-year premium holiday for the overfunded Comprehensive Protection Plan (CPP), the clergy death and disability plan.  In addition, some Annual Conferences, including the Wisconsin Conference, increased the pension contribution rate churches paid for their pastors to help provide the funds needed to cover these additional payments.  Those actions, along with improvements in the stock market in 2009, allowed conferences to get through this funding crisis.  However, this experience illustrated to many people the potential vulnerability of many conferences’ ability to continue to fully fund pension liabilities in future stock market drops, particularly when considering the historical decline in membership in the denomination within the U.S.

As a result, after many meetings, surveys, discussions, and work by the Sustainability Advisory Group (SAG) and other groups, the GBPHB has submitted GC petitions for two separate changes to the current CRSP plan to GC.  GBPHB is recommending to GC that a less expensive, more-limited benefits, version of CRSP be approved by GC.  However, because GBPHB also heard strong support (particularly from Conference Treasurers and Benefits Officers) for switching back to a full DC plan, which would limit Conference liabilities to those for past plans, they have also submitted legislation for this type of plan.

Also, both proposed plan changes include a requirement that clergy pay for a portion of their retirement through payroll deductions that will be matched by the local church.  This aspect of the plan, while creating some additional administrative work for local church treasurers and Annual Conferences, is meant to help make clergy take more responsibility for their own retirement financial plans (certainly an admirable goal), rather than simply relying on the church to “take care of them.”

-Lisa King

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