New pension plan for part-timers?
Conference to vote whether part-time pastors should pay 3% to participate
By Jessica Connor
If South Carolina United Methodists give the nod, part-time pastors will have a new pension plan beginning in January.
The S.C. Conference Board of Pension and Health Benefits is recommending part-time pastors contribute at least 3 percent toward their pension, which the church would match by 9 percent, starting Jan. 1, 2014.
The full conference will vote on the recommendation when it gathers in Florence June 9-12 for Annual Conference.
Currently, part- and full-time United Methodist pastors get health insurance and pension paid by their local church; the pastor does not have to put any money toward his or her pension account. But General Conference 2012 decreed annual conferences should have the right to decide whether they wish to cover part-time pastors at the same level they do full-time pastors “ or even cover them at all.
The S.C. Board of Pension and Health Benefits heavily researched three options “ continue at same level, scale back or eliminate coverage “ and spent much time in dialogue with people. Ultimately they decided to recommend continuing coverage for part-time pastors as long as the pastor contributed 3 percent.
Herman Lightsey, chair of the conference BPHB, said part-time pastors are valuable assets to churches, So looking at that, we felt if we could, we had an obligation to do something.
Lightsey said the board felt that, given the rising costs and the number of past-due bills owed by churches, the conference was better off having part-time pastors contribute a small amount to a 403B plan, which is the same plan conference lay staff are eligible for.
He called it a win-win.
As a deferred comp type plan, the minister has to, as we keep saying, put a little skin in the game, Lightsey said.
He said the local church will be the plan sponsor, and the General Board of Pension and Health Benefits will administer the plan and bill the local church directly. That means if the local church is late or does not pay the pension bill, instead of the conference having to pay the general board, then the general board itself would collect from the church. Kept in mind, the local church has to agree to sponsor and fund their portion.
If the pastor does not want to pay the 3 percent, then he or she does not have to participate in the plan.
Conference Pensions and Health Benefits Officer the Rev. David Anderson, who was unavailable for comment, told the Advocate a few months ago the new plan for part-time clergy could enable churches to see its pension payment lowered substantially each month. He said it puts the church in the driver s seat in understanding the real cost of part-time clergy.
Lightsey said that four years ago, the BPHB made a pledge and promise to Annual Conference that they would always be looking to balance what churches can afford long-term with the best benefits available for clergy and laypeople.
To me this is another chapter or step in fulfilling that promise, and it s not the end of it, Lightsey said. We re going to continue to look, to better these things, especially if we can do it by lowering costs and giving pastors more choice, because everybody doesn't like the same thing.
What about full-time clergy?
Full-time clergy will continue on the Clergy Retirement Security Program, or CRSP. However, the CRSP formula used to calculate pastors pension benefits will change slightly in 2014, becoming what Anderson dubbed CRSP Lite.
The General Board is implementing a 20 percent reduction in the formula starting in 2014. The reduction will not impact current retirees, only pastors who retire after Jan. 1, 2014.
Currently, the benefit paid to retirees is 1.25 percent, times the Denominational Average Compensation (at the time of their retirement), times the number of years of service after Jan. 1, 2007. In 2014, that formula will change to 1 percent (not 1.25), times the DAC, times the post-2014 years of service, plus 1.25 percent, times the DAC, times the years of service between 2007 and 2014.
Also, instead of churches being required to contribute 3 percent, beginning in 2014 churches will contribute 2 percent and pastors will be expected to contribute 1 percent. However, the conference will continue to directly bill churches for 3 percent.
New health plan for retired pastors
Retired S.C. pastors, and the conference itself, will pay a lot less for health insurance next year under a new vendor, AmWINS, a major national provider of retiree health benefits, instead of the plan offered through the general board. Other conferences are moving to this company; in S.C., SCANA uses AmWINS for their retiree health plan.
Anderson told the Advocate in February this change will provide the same benefits for less money, plus allow the conference to take advantage of Medicare Part D.
The move would also provide a health benefit for those retiring after Annual Conference 2015; those pastors currently are not slated to have insurance through the conference.
The existing plan bri
ngs a premium of roughly $439/month per participant “ 70 percent ($308) paid by the conference and 30 percent ($131) paid by the participant.
The new plan will have two options or levels of benefits. The standard plan will closely resemble the current retiree plan. The total estimated cost is just $298/month per participant. The conference would provide $200/month, while the participant would pay $98. The second option would be the economy plan, which would have fewer benefits. The total estimated cost of this plan is just $235/month per participant. The conference would provide $200/month, while the participant would pay $35.
This is really going to be a good plan for retirees because it reduces money, Lightsey said. If they do the standard plan, it will reduce the premium, but won t affect coverage overall.
The plan will go before the full Annual Conference for a vote in June.