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07718 November 5, 2007
Board of Pensions portfolio tops $8 billion
Most indicators positive, so few benefits changes are made
by Jerry L. Van Marter Presbyterian News Service
SCOTTSDALE, AZ - With a 9.6 percent return through the first three-quarters of 2007, the investment portfolio of the Presbyterian Church (U.S.A.) Board of Pensions topped the $8 billion mark for the first time.
The gain for the year-to-date is $738 million, vice-president for finance Mike Fallon told the board at its Oct. 27 meeting here.
The board heard mostly positive news about the performance and reserve levels of most aspects of the health, death and disability, pension and assistance plans. Cost increases were approved for only two programs that historically show unpredictable claims experience - a 3 percent hike for medical continuation (for participants who are no longer in active church service) coverage and a 9.2 percent increase for retired participants in the Affiliated Benefits Program (ABP) who are not yet eligible for Medicare. Both increases are effective Jan. 1, 2008.
The Medical Continuation increase means participants enrolled in the plan prior to 1987 will pay $8 more per month - from $280 to $288 - and those enrolled after 1986 will pay $490, an increase of $14 per month.
According to the BOP's medical actuary, John Cookson, the Medical Continuation plan is "highly volatile," due to relatively low enrollment and wide variations in claims from year to year. For instance, he said, claims increased more than 52 percent in 2006, after registering 2 percent and minus-9 percent the previous two years.
Thus, the board is trying to "smooth" that volatility by combining the Medical Continuation and active participants experience to calculate trends.
Because there are only 20 participants in the board's ABP early-retiree program, it too is financially volatile. The 9.2 percent increase means those participants will be paying $855 per month next year, up from $783 in 2007.
No dues increase is in the offing for the BOP's Medicare Supplement program, which has also seen fluctuations in cost over the years. That program - whose costs are driven by prescription drug prices - has stabilized since BOP began qualifying for a federal subsidy (about $26 million this year) as part of the federal government's new prescription drug benefit for Medicare recipients.
And recent adjustments to the BOP's Medical Plan continue to show positive results. The Medical Plan reserve currently stands at $72.3 million, well above the board's target of $61.8 million.
In other actions, the board:
Approved a Christmas gift for retirees receiving income supplements of $250 for single persons and $500 for married couples. Increased the Income Supplement eligibility levels to $25,700 for single persons and to $30,840 for married couples - an increase of approximately 4.5 percent over 2007. Extended the board's Seminary Debt Assistance Program through 2010. The program was established in 2001 for five years and in 2005 was extended to 2007. The program provides a grant of up to $2,500 a year for up to four years to pastors who are in their first seven years of ordained ministry and are serving a congregation with fewer than 150 members and a budget of less than $250,000 in a full-time, called position. When the program was started, the BOP set aside $2.5 million to fund it. Voted to exclude employer matching contributions to the board's Retirement Savings Plan from the "effective salary" calculation on which dues are based. The move, said Pension Committee chair Don Fleischer, should enable more churches to match their pastors' Retirement Savings Plan contributions because they will not have to pay dues - which are based on "effective salary" - on those matching funds. Postponed action on a proposal that would have dropped the minimum number of working hours for eligibility for participation in the Retirement Savings Plan from 20 hours per week to 17.5 hours per week. Several board members raised concerns about the legality of the move and possible inequities it could cause in other aspects of the board's benefits plan. Delayed for one year implementation of a plan to modify Anthem HMO benefit levels to establish greater parity with the Blue Cross/Blue Shield PPO in the Louisville area. Currently, Louisville-based plan members have the option of the PPO or the Anthem HMO.
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