From the Worldwide Faith News archives www.wfn.org
Pension Board Adopts Package of Dues Credits,
04 May 1996 16:06:43
96110 Pension Board Adopts Package of Dues Credits,
by Jerry L. Van Marter
PHILADELPHIA--Buoyed by bullish 1995 financial market performances and the
recovery of its major medical plan from alarming deficits, the Presbyterian
Church (U.S.A.) Board of Pensions adopted an unprecedented package of dues
credits and major medical plan enhancements at its March 14-16 meeting
The Board voted to
give a one-half of 1 percent major medical dues credit to all
employing organizations in 1997
lower the major medical deductible for all plan members from 1.5
percent of effective salary to 1 percent
replace the current $125 benefit for annual physical examinations
to an unspecified-dollar-amount benefit to cover a package of
"screening and immunization services"
grant an experience apportionment of 8 percent in retirement,
survivor and disability pensions as of Aug. 1, 1996, and in
active members' pension credits, effective Jan. 1, 1996.
Major medical plan recovery complete
The enhanced major medical benefits approved by the Board signal a
recovery from serious illness in the Board's medical insurance program,
which in 1988 showed an alarming $17 million deficit.
Since then the Board has embarked on a stringent program of dues
increases, benefits cuts and rigid cost controls. Major medical dues
currently stand at 16 percent of effective salary -- up from 11 percent in
1989. Pension dues are holding at a steady 12 percent, making the combined
dues for employing agencies 28 percent.
And while the one-time-only dues credit is modest -- $150 on a salary
of $30,000 -- it is the first time in memory that employing organizations
will actually pay less for major medical coverage for their employees.
More important to most observers is the lowering of the deductible.
The Rev. David Nakagawa, the Board's Western regional representative, told
the Board's Healthcare Committee, "The one thing I hear most often from
plan members is, Do something about the high deductible!'"
Board chair D. Eugene Sibery agreed. "This [reducing the deductible]
is a profound motion," he said. "It is the most sought-after change I hear
in the church."
With its action here, the Board reduced the deductible to its
pre-financial crisis level.
"We know that churches and plan members have been asked to sacrifice,"
said Margaret Mellen, vice president for health care. "Now it's time to
share the positive financial results with those churches and plan members."
Preventive care emphasis strengthened
The annual physical examination changes are part of a continuing
effort to emphasize the cost-effectiveness of preventive care, said
Bernellyn Carey, the Board's health promotion manager. She noted that
health experts have reversed their position on standardized annual physical
examinations and now recommend periodic health exams, screenings and health
Last year, only 25 percent of eligible plan members utilized the
physical examination benefit. Carey said her goal is to increase
utilization under the new benefit to 50 percent the first year and 75
percent of all plan members by 1998. The new benefit is effective Jan. 1,
Carey also updated members of the Healthcare Committee on the
scheduled April 1 launch of "RESPONSE," an immediate assistance program
designed to help plan members "handle problems that affect their physical,
mental and spiritual well-being, career and relationships."
"RESPONSE" features a 24-hour, 7-day-a-week toll-free telephone line
(1-800-455-5129) staffed by trained professionals who will guide callers in
the right direction for initial treatment. Normally, the first step is up
to six free counseling sessions, with additional inpatient and outpatient
treatment covered by the benefits plan of the Board under its companion
"ASSIST" program. Both "RESPONSE" and "ASSIST" are managed for the Board
by Value Behavioral Health.
The program is designed to address stress, anxiety and depression;
marital and family difficulties; alcohol and other substance abuse;
elder-care and child-care questions; parenting problems; relationship
problems; bereavement; financial and legal concerns; and career counseling,
Size of experience apportionment debated
With the Board's pension portfolio earning a resounding 23.6 percent
return in 1995, Board members were in the enviable position of deciding not
whether to grant an experience apportionment, but how large a one to grant.
Staff suggested and the Board's Pension Committee recommended a 10
percent apportionment. In a joint session with the Pension Committee before
the Board meeting, members of the Investment Committee proposed a 6 percent
apportionment and insisted that "no more than 8 percent" be considered.
Investment Committee members argued that a 10 percent apportionment
(and even an 8 percent one) exceeds guidelines for apportionments
established a year ago by the Board. The guidelines set the reserve
requirements of the pension fund at between 10 and 20 percent of
accumulated liabilities and tied apportionments to the rise in the Consumer
"One good investment experience does not guarantee that it will happen
again," said Lawrence Conway, a Board member from Toledo, Ohio. "Let's use
Sibery noted that a 10 percent apportionment leaves the reserves at 16
percent, while an 8 percent apportionment leaves them at 18 percent.
"While the guidelines are valuable, I don't want to see the 20 percent
established as a floor when it was intended to be a ceiling," he said. "I
don't want the Board of Pensions to be perceived as hoarding."
Investment Committee vice chair Christopher Smith of Wilton, Conn.,
responded that "18 percent reserves with an 8 percent apportionment is not
hoarding, it's prudent."
The Rev. William Henning, Pension Committee member and executive
presbyter of Arkansas Presbytery, echoed Board president John Detterick,
saying, "How do our members see us? We are somewhat caught between prudent
business and member need." After telling stories about several low-paid
Arkansas pastors, Henning asked, "Is it better stewardship to hold that
money [in reserve] for some future unidentified need or give it to our
members, for whom it makes a big difference?"
Madelynn Matlock of Cincinnati said, "We all have the same goal -- to
maximize benefits while preserving the long-term health of the fund."
Urging adherence to the guidelines, she said, "What changes are the facts
-- that's why systematic decision-making is so important."
The Board voted 18-6 to set the apportionment at 8 percent.
Advocacy role assumed for retirees needing special assistance
Faced with a decrease in its portion of the Christmas Joy Offering,
the Board adopted a resolution "assuming the role of advocate on behalf of
those servants and their families" who rely on the Board of Pensions for
The Special Offerings Task Force of the General Assembly is
recommending to the upcoming Assembly in Albuquerque that the Board of
Pensions portion of the Christmas Joy Offering be reduced from 50 percent
to 30 percent in order to fund a new "children at risk" program of the
General Assembly Council (GAC).
Such a move, the Board declared, "would greatly diminish a present
source of funding for those servants of the church requiring special
medical and other financial assistance." It would certainly, for instance,
hasten the date when the Board of Pensions will be forced to stop
admissions to its special nursing home assistance program.
Stressing the Board's determination to find ways to continue the
special nursing home assistance program as well to provide other special
assistance to plan members, the Rev. Heidi Peterson, chair of the Board's
Assistance and Retirement Housing Committee, said, "This resolution moves
us from simply being an administrator to the role of advocate." Sibery
noted that "this is the first time the Board of Pensions has gone in this
The resolution was applauded by GAC chair the Rev. William McIvor.
"This resolution is consonant with GAC action to establish a work group to
work with the Board of Pensions to find ways to adequately fund the special
nursing home assistance program," he told the Board.
For more information contact Presbyterian News Service
Presbyterian Church (U.S.A.), Louisville, KY 40202
phone 502-569-5504 fax 502-569-8073
E-mail PCUSA.NEWS@pcusa.org Web page: http://www.pcusa.org
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