wfn.org | Pension Board Adopts Package of Dues Credits,

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21-Mar-96

96110     Pension Board Adopts Package of Dues Credits,  
                        Enhanced Benefits 
 
                      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 
here. 
 
     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 
counseling. 
 
     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, 
1997. 
 
     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, 
among others. 
 
             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 
Price Index.  
 
     "One good investment experience does not guarantee that it will happen 
again," said Lawrence Conway, a Board member from Toledo, Ohio.  "Let's use 
the guidelines." 
 
     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 
special assistance. 
 
     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 
direction." 
 
     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. 

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  Presbyterian Church (U.S.A.), Louisville, KY 40202
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