wfn.org | Board of Pensions Completes Demographic Study

[PCUSA.NEWS@pcusa.org]

5-November-1997 
97427 
 
    Board of Pensions Completes Demographic Study 
 
    by Jerry L. Van Marter 
 
ONTARIO, Calif.--The Board of Pensions (BOP) of the Presbyterian Church 
(U.S.A.) has completed an exhaustive demographic study of its 16,000 
benefits plans members -- a study that board president John Detterick said 
"gives us excellent information to be able to understand and respond to the 
needs of our members." 
 
    Detterick said the two-year study contains "no big surprises but 
confirms several things we sensed or knew anecdotally."  The real 
importance of the study, he added, "is that it raises long-term issues for 
the board and for the church." 
 
    Roger Mendoza, the project leader for the study, said the major 
findings of the study are a steady decline in the number of BOP plan 
members of about 3 percent a year, an increase in the proportion of female 
active clergy, but a decline in the number of female lay employees, and a 
precipitous decline in the number of new lay employees in the plans -- 
major medical, pension and disability. 
 
    From a high of 1,757 new lay employee entrants in the plan in 1987, 
enrollment of new lay employees declined to 667 in 1994 before rising 
slightly to 678 in 1996.  The number of new ministers enrolled in the plans 
declined from 526 in 1987 to a low new enrollment of 259 in 1994 before 
rising slightly to 311 in 1996. 
 
    The cost of major medical coverage -- currently 16 percent of effective 
salary -- appears to be the primary culprit.  Only ministers serving 
congregations are required to participate in the benefits plans "and the 
larger employers in my region are all pulling their employees out of the 
board's plans," said the Rev. Robert Smith, the BOP's regional 
representative for the southeast.  He blamed the lack of participation by 
employers that are not congregations on the cost of major medical coverage. 
 
    James C. Hickman, a former BOP member who is now a consultant to the 
board's Pension Committee, said the "community nature" of the plan -- in 
which all participating employers pay the same percentage of dues, thereby 
helping support plan members in lower-paying positions -- is at risk.  "The 
values of the world, which are more individualistic, are impinging on the 
community nature of the benefits plans," Hickman said.  "Can such a plan 
survive into the next century?  It will be tough," he conceded. 
 
    The average age of entering ministers is older -- from 35.7 in 1987 to 
40.3 in 1996.  With fewer years paying into the pension plan, said Dan 
McGill, a longtime consultant to the board and former chair, "12 percent 
dues is not sufficient to cover the pension costs of persons entering the 
plan."  McGill said the current pension plan was designed for persons 
entering the plan at the age of 29.  "Age 39 [at entry] is not financially 
okay and creates long-range implications that will have to be dealt with," 
he said. 
 
    Further, nearly two-thirds of ministers currently enrolled in the plan 
are baby-boomers, born between 1946 and 1964.  The pension plan is 
fully-funded, so the impending retirement of such a large number of 
ministers "is not an actuarial issue," said McGill.  However, Detterick 
added, "the question for the church is whether we will have enough 
ministers to go around once the baby-boomers retire."  Detterick said the 
question is "not the board's problem, but I believe it is our 
responsibility to raise the issue for the church." 
 
    Detterick said another "significant" finding of the study is how few 
members' spouses have their own health care benefits.  Currently just 25 
percent of spouses have benefits other than what they are entitled to 
through BOP coverage.  So the dependence of three-quarters of plan members 
solely on the board creates what BOP Pensions Committee chair the Rev. 
William Henning calls a "moral imperative to pay close attention to family 
needs." 
 
    Perhaps the most distressing finding of the demographic study is the 
dramatic increase in the number of disabled members -- from 0.4 percent of 
all plan members in 1988 to 2.5 percent in 1995.  The biggest concern, 
McGill added, is that 30 percent of all disabilities are attributed to 
mental illness -- far above the average for other denominations and for the 
U.S. population as a whole. 
 
    Hickman said the board must lead the church to remove the stigma of 
mental illness as permanently disqualifying a person from church 
employment.  To do so, the board's plan must focus more on rehabilitation, 
he continued.  "We owe them [members on disability] money, but we owe them 
better pastoral care as well.  The question should be: How can we bring 
members back to full service?" 
 
    Gloria Wilson of Tempe, Ariz., chair of the board, announced her 
intention to convene a special meeting of the board sometime in 1998 to 
focus exclusively on some of the issues raised by the study.  "Nothing's 
busted, but the world is changing and we will have to adapt," Hickman said. 
McGill agreed.  "With aging members and shorter careers, we have to ask 
what is the church's moral and financial obligation to the servants of the 
church.  These issues are the basis for a lot of discussion." 
 
    Board of Pensions actions 
 
    Though results of the demographic study dominated the meeting, the 
board took action on several other matters.  Among them, the board: 
 
      increased the monthly subscription rate for Medicare Supplement 
coverage in 1998 from $76 to $90 (the nearest comparable policy available 
on the commercial market in Philadelphia, for example -- is $170). 
      approved an 8 percent increase in the annual premium rates for 
Prudential Dental Insurance and updated fee allowances from 1994 to 1996 
levels. 
      approved a change in the preventive health care benefit (annual 
physical examination) to waive the deductible for "preventive care office 
visits." 
      approved a $150 per person Christmas gift for persons receiving BOP 
income supplements. 
      approved a 1998 administrative budget of $23.3 million, up 7.8 
percent from 1997, and a capital budget of $641,000, almost 15 percent less 
than 1997. 
      approved a new "relief of conscience" policy governing the 
segregation of dues paid by employers conscientiously opposed to abortion 
from the rest of major medical dues to ensure that the dues of those 
opposed to abortion will not be used to pay for abortions.  The new policy 
establishes an account into which an amount equal to the previous year's 
expenditures for abortions ( $3,800 in 1996) will be placed to assist with 
medical claims of adopted new-born dependents. 

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