Report on Adopted Pension Plan, by David Stotts, 5/4/2012

5/4/2012

Lay delegate to GC David Stotts, Treasurer/Director of Finance and Administration
& Conference Benefits Officer, Mississippi Conference


Now that all of the motions and amendments have been accepted and rejected, I would like to give you a brief description of the Pension Plan that was adopted.

The goal was to achieve an affordable and sustainable plan for our clergy. One additional goal that came out of our Finance Administrative Committee was that the plan needed to be what we valued.

There were two plans before us. First was a purely defined-contribution plan (DC) and second was a defined-contribution/defined-benefit plan (DC/DB) that resembles the current plan with reduced cost.

The General Conference rejected the minority report which was the DC plan. This put the DC/DB (CRSP Lite) up for vote. If this plan had been defeated, we would have been back where we are today. Thankfully, that did not happen.

The plan came from GBOP Board of Directors and was required for all clergy serving at least half time. I was able to get an amendment passed that required all full-time clergy to be in the Restated CRSP DB/DC with a conference option for those serving half time or more. It passed in subcommittee and came to the floor. After defeating an amendment to carry it back to the original proposal, we adopted the Restated CRSP DB/DC plan.

This was, in my opinion, the best of all worlds. This plan allows our conference to value our full-time clergy with a pension plan that rewards years spend in the full-time ministry with a Cadillac plan. These are the clergy who give a lifetime of 24/7 to the church.

The conference will reward clergy who are serving less-than-full time but at least part time by (1) opting for the Restated CRSP DC/DB or (2) a conference-sponsored full defined-contribution plan. Utilizing a defined contribution will allow those serving less-than-half time to be covered in the plan at the option of the Annual Conference.

Here are the benefits of the Restated CRSP DC/DB.

 A. For the defined-benefit portion of the plan, the plan provides 1% of the DAC (Denominational Average Compensation) at the time of retirement for the service years in the plan. (Under CRSP, this was 1.25%)

B. For the defined-contribution portion of the plan, the conference contributes 2% of plan compensation. The conference will match up to 1% additional. (CRSP made a 3% contribution) This continues to be the same as long as the clergy contributes 1%. If a clergy is already contributing 1% to UMPIP, no additional match will be required.

This new plan will allow the Annual Conference Board of Pension to reduce the 17.5% currently charged for the Clergy Pension Benefit. We will have to determine that rate.

If the conference provides a defined contribution for those serving less-than-full time, the rate charged for that plan can be reduced from 14.5% to the contribution rate of the annual conference. A clergy match should also be a part of this plan as described above.

The effective date of this plan has not been announced, but I have been in conversation with the General Board and I believe that date will be January 1, 2014. Not only will they need time to adjust the administration of the plan, but our Annual Conference will need to determine what the plan for the less-than-full-time clergy will be. There will also be a lot of education that will need to be done around the new plans. This may just be the year that clergy will want to attend the 3 “L” Academy.

There are many questions about the new plan, including how transitional leave will be handled. It is too early to know the answers to all those different legislative matters and how each affects the other. As long as a clergy is earning compensation, they are on the plan. Severance pay may be treated differently. We will just have to sort that out. If a person moves from full time to part time, then the rules of the conference plan will be followed. That would depend on the plan the Annual Conference had adopted and if the 3/4 or 1/2 time people are covered under Restated CRSP or if the conference adopted a DC-only plan for them.

More information will follow as we work over the next weeks and months to sort this out. As I see it, this has no effect on the legislation going to Annual Conference this year.