UM lawmakers approve new plan for offering clergy pension benefits

United Methodist News Service
PITTSBURGH—United Methodist clergy members now have a new pension program—maybe.
In a vote of 615-215, General Conference delegates approved the new program May 6 to provide “security with choice” for pensioners. A similar plan was approved for staff members of United Methodist agencies.
Delegates made the change to provide “the denomination with the best practices of major corporations.”
After approval, delegates asked the Judicial Council, the denomin-ation’s supreme court, for a declaratory decision on the legality and constitutionality of the plan. The council deferred the requests for a decision until its fall meeting.
The new General Board of Pension and Health Benefits plan has two parts:
> A defined benefit program. It provides the same benefit to all clergy members across the denomination based on a formula of 1.25 percent of the denominational average compensation multiplied by years of credited service.
> A defined contribution component of 3 percent of actual compensation. That allows participants to accumulate cash in a self-directed individual account.
The two components are to be funded by annual conferences and would become effective Jan. 1, 2007.
It also is recommended that church lay workers receive pension contributions of 3 percent of actual compensation, effective Jan. 1, 2006.
The pension board in Evanston, Ill., administers at least nine pension, relief or benefit programs created before 1981. Some retirees today benefit from both the current plan, known as the Ministerial Pension Plan, established in 1982, and from one or more of the prior plans.
The latter are referred to collectively as “pre-82.”
“This (new plan) is very fair for all clergy throughout all of our jurisdictions,” said Verna McKinney, Kentucky Conference. She observed the six different ways that contributions are made to the current ministerial pension plan and how differences vary from conference to conference.
Penney Schwab, Kansas West Conference, called the new plan fair and balanced. She said it “does the most good for the most clergy.”
Fred Haustein, Arkansas Conference, disagreed.
“I believe the plan is inadequate,” he said. “It is not our best stewardship to produce the result we want for our pension responsibility.”
Haustein referred to a study noting that if the church had been participating in this plan for the last 20 years, pension benefit would have been $10,808 annually compared to the current $13,464.
Before the vote, Joel Huffman, Desert Southwest Conference, told delegates that the plan would stop the growing liability under the ministerial pension plan for annual conferences and allow annual conferences to reduce pension costs. He said the new plan would allow reserves to be freed up for the medical expenses of retirees and minimize the risk for clergy at the most vulnerable times of their lives in retirement.