wfn.org | Agency readies pension proposal for General Conference

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March 26, 2003	News media contact: Tim Tanton7(615)742-54707Nashville, Tenn.
 10-71B{173}

By United Methodist News Service

The United Methodist Church's pension programs would be strengthened and
expanded under a proposal going to the denomination's top lawmaking assembly
next year.

Directors of the church's Board of Pension and Health Benefits, meeting March
20-22 in Louisville, Ky., voted to present the proposal to the General
Conference. The assembly, which gathers every four years, will meet April
27-May 7, 2004, in Pittsburgh.

The board also affirmed the decision it made last November to change its
annuity conversion policy from a fixed rate to a variable market-based rate
this summer.

"The board's endorsement to proceed with the new pension plan, coupled with
an affirmation of its annuity conversion policies, strengthens our ability to
meet current and future retirement processes to clergy and lay persons
employed by the church," said Barbara Boigegrain, top staff executive of the
board in Evanston, Ill.

When it goes to General Conference next year, the board will propose a
combined defined benefit and defined contribution core pension program for
clergy that would begin Jan. 1, 2007. The defined benefit piece would provide
a monthly payment in retirement. The defined contribution part would provide
an employer contribution equal to 3 percent of a person's compensation. 

Annual conferences also would be able to offer an optional defined
contribution plan along with the core benefits. The additional defined
contribution benefit could include matching contributions of up to 6 percent
of compensation and a variety of distribution options, such as cash
installment payments, lump sum distribution, and annuity conversion through
an insurance company or mutual fund organization.

For lay workers of the church, the board affirmed a recommendation for a new,
mandatory pension plan. The plan would provide benefits to lay workers in
local congregations - such as secretaries, choir directors and musicians -
and extension ministries. General agency and annual conference lay workers
are already covered by the board's existing plans.

With the new defined contribution plan, sponsors would be expected to
contribute 3 percent of each enrolled employee's compensation to the program.
"If passed by the General Conference for implementation January 2007, it will
be the first time lay workers would be able to receive uniform retirement
benefits across the nation," the agency said in a press release.

Documentation is being prepared for the proposal to General Conference. The
board will vote on the plan document when it meets in July, said spokesman
Michael Lee.

The agency also is developing a "broad-based communications" plan to help the
church understand the proposed changes, Lee said. The plan will include
meeting with small groups of people that represent constituencies within the
denomination, he said.

During the board meeting, the directors affirmed their new annuity conversion
policy. Effective July 2, retirees who elect to convert their pension account
balances to annuities will do so at a floating, market-based rate instead of
at a fixed rate. Clergy members who have reached age 62 or 35 years of
service will be "grandfathered" in with the fixed rate, an exception based in
part on the "unique covenant relationship" between the church and its clergy,
as well as the fact that clergy must convert to annuities upon retirement,
while lay retirees have other options available.

With a current fixed rate of 8 percent and market rates in the 5 to 6 percent
range, the board has been paying above-market returns on annuities. That
money has been coming out of reserves.

"The board carefully considered requests from leadership of two general
agencies to change the timing and scope of converting retirement account
balances for staff from a fixed 8 percent annuity conversion rate to a
market-related variable conversion rate," the agency reported. "Upon careful
study and reflection, the board determined that the original decision best
upheld the interests of the greatest number of people."

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United Methodist News Service
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