United Methodist Church employees could be getting more flexibility and greater protection in their pension plans in the next few years, through a proposal being developed by the denomination's benefits agency.
The proposed changes would replace the current pension plan with a new one that combines the features of a defined contribution plan with those of a defined benefit plan.
"For the participant, (the defined benefit piece) provides a level of protection that they can count on at retirement and that they know they'll have for the rest of their life," said Woody Bedell, chief strategic officer for the United Methodist Board of Pension and Health Benefits in Evanston, Ill. The participant will receive a guaranteed monthly payment at retirement.
"The defined contribution (piece) provides a contribution equal to 3 percent of a person's compensation," he said. The contribution would be based on an individual's level of compensation, he said. At retirement, constituents could do as they pleased with their account balances, which would no longer have to be annuitized.
Annual conferences would fund the basic clergy pension benefit, and the conferences would have the option of adding to that benefit.
The new pension plan would provide similar benefits to the current one, while creating less liability for the annual conferences and reducing overall costs, Bedell said.
The recommendation would also provide for full- and part-time lay employees with a year or more of permanent service to receive a minimum benefit of 3 percent of compensation to a defined contribution plan. Church sponsors would have the option of adding to that.
The governing directors of the Board of Pension and Health Benefits approved the proposal, recommended by their Benefits 2004 Task Force, during a Nov. 15-16 meeting in Tampa, Fla.
"It's an historic moment," said Barbara Boigegrain, top staff executive of the board. "The board has responded with insight and integrity by preserving what participants have liked about the benefits while protecting the long-term security of the pension benefits."
The agency will present its proposal to the General Conference, the denomination's highest legislative assembly, which meets in 2004 in Pittsburgh.
The directors also decided not to pursue developing a unified health plan, which had been discussed at an earlier meeting. Instead, they will focus more on marketing the existing HealthFlex plan as a voluntary option for all conferences. The agency will create greater provider networks for discounts, and it will promote health and wholeness initiatives identified by the task force, Bedell said.
The proposal reflects many of the comments that the task force gathered during a series of "listening" events held with church employees around the United States.
"The task force recommendations sought to balance the paradoxes of fair and equitable availability while managing cost," Bedell said. The group considered many options, and in "the final analysis, it came down to providing benefits in a different way," he said. "Our job now will be to help the church understand how the new program works both for the church and the individual."
The board's directors also made several decisions regarding the investment options available to people who have retirement savings in the agency's Personal Investment Plan. As of Nov. 18, the board has started making two new investment options available for participants' plan contributions: the Multiple Asset Fund and the Stable Value Fund.
The Diversified Investment Fund will remain available as an investment option for employer and conference contributions. However, as of Dec. 31, the board will no longer offer the fund to Personal Investment Plan participants. The Diversified Investment Fund is designed for long-term investment, and allowing participants to move in and out of the fund at any time is inconsistent with that philosophy, the board decided. The two new funds will have some of the same investment features while enabling Personal Investment Plan participants to move their money around with greater ease.
By Tim Tanton