wfn.org | [PCUSANEWS] 2003 investment return bolsters BOP reserves

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Note #8169 from PCUSA NEWS to PRESBYNEWS:

04139
March 16, 2004

2003 investment return bolsters BOP reserves

Pensions board approves a 2-percent increase in retirement benefits

by Jerry L. Van Marter
and Karen Babik, Board of Pensions

PHILADELPHIA - A near-record-breaking 27.5 percent investment return for 2003
has enabled the Presbyterian Church (USA) Board of Pensions (BOP) to
replenish its contingency reserves while granting a 2 percent increase in
pension benefits for active and retired plan members and their survivors.

	The 2 percent "experience apportionment" is a permanent increase in
the payments to retired church workers and survivors and in the pension
credits of active members. The increase goes into effect on Aug. 1.

	During a meeting on March 6, the BOP also approved a 4-percent raise
in disability benefits of members receiving such benefits as of Dec. 31,
2003.

	The board's investment portfolio experienced a cumulative loss of
more than 17 percent from 2000 to 2002 because of a sharp downturn in
financial markets.

	"We must remember that the 27.5 percent gain (in 2003) only brings us
back to the asset level we were at two years ago, while our liabilities have
continued to grow," said Earldean V.S. Robbins of San Francisco, the BOP
chair.

	"Reserves are important, because we have no alternative funding
sources," said Anna Hoover, vice-president for retirement benefits. "Dues are
only a drop in the (assets) bucket and cannot bail us out. We have no
insurance, no government fallback, no assets to sell off. Reserves are all
we've got."

Medical costs still climbing

	After two years of substantial losses - of $7.2 million in 2001 and
$3.8 million in 2002 - the Medical Plan's fund balance improved by $4.1
million in 2003, to $35.5 million, or 27.2 percent of total plan expenses.
BOP guidelines call for a fund balance (reserve) of 20 percent to 33 percent
of expenses.

	BOP officials traced the improved finances to dues increases in 2002
and 2003, benefits changes that helped the bottom line, and
lower-than-expected inflation in health-care costs last year - of 8.1 percent
rather than the expected 10 percent to 12 percent.

	Yet dues are still not keeping up with costs. "Despite the slight
improvement in trends, health-care costs will continue to rise, and are
likely to require a half-percent increase in the medical dues for 2005," said
John Cookson, the board's Medical Plan actuary.

	Any changes in dues will be considered at the board's July meeting.

Other business

	The board also:

*Established the first day of the month as the beginning day for all
retirement and survivor pensions and the issuance day for pension checks,
effective July 1, 2005.

*Extended the Seminary Debt Assistance Program, which helps first-call
pastors serving small churches pay off their educational loans, through Dec.
31, 2007.

*Approved an overture calling for reimbursement of some adoption expenses,
provided that adequate funding becomes available.

*Reviewed an expanded preventive-health benefit for adopted children of
international origin, effective June 1.

*Approved the report of its Task Force on Clergy Recruitment and Retention,
which will be submitted to the 216th General Assembly this summer.

*Reelected Robbins as chair; the Rev. Arthur Sundstrom, pastor of Chevy Chase
(MD) Presbyterian Church, as first vice chair; and elder Ann C. Petersen of
Chicago as second vice chair.

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