Pension—to provide or not to provide?
By Jessica Connor
Should the S.C. Annual Conference provide pension for part-time pastors—and if so, at what level?
That question will come before more than 2,000 United Methodist clergy and laity June 9-12 when they gather at the Florence Civic Center for the conference's yearly meeting.
Currently, S.C. United Methodist churches pay not only for health insurance for their full- or part-time pastors, but also pension, without the pastor having to put in any money toward his or her pension account.
But at General Conference 2012 (the quadrennial legislative gathering of the global UMC), the body decided 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 to cover them at all. Implementation is Jan. 1, 2014, so annual conferences must decide this summer what they wish to do.
In South Carolina, the conference Board of Pension and Health Benefits has been researching options and is holding listening sessions now with the Cabinet. The BPHB will make a recommendation at its March 16 meeting.
Basically, we have three options, said the Rev. David Anderson, conference pensions and health benefits officer: continue providing pension at the same level for part-time pastors, scale back a notch or offer no benefit at all.
Once the conference BPHB makes its recommendation, the full Annual Conference will vote on it in June.
The first option, continue with the current level, involves allowing part- and full-time pastors to participate in the Clergy Retirement Security Program, a defined benefit and defined contribution plan. In CRSP, churches currently pay 3 percent toward the pastor s account and pay the prorate share of the defined benefit cost, though this is slated to change slightly in the formula for 2014 and become what Anderson has dubbed CRSP Lite (see below).
The second option keeps the same benefit but requires the pastor to put in at least 3 percent toward his or her pension, which the church would match by 9 percent.
This puts the church in the driver s seat in understanding the real cost of part-time clergy, Anderson said, noting the church could see its pension payment lowered substantially each month.
The third option, no pension benefit for part-time pastors, could also be considered.
What the S.C. Conference will decide in regards to pensions for part-time pastors is just one of the ongoing (things) that The United Methodist Church is considering as it looks to balance taking care of our clergy and our churches, said Herman Lightsey, chair of the conference BPHB.
He said the BPHB promises to continue to discern pension and insurance issues and provide the best benefits that the conference and its churches can fund long-term.
These decisions are not easy, but laity and clergy together are working hard to ensure that our pastors are treated fairly, Lightsey said, asking for prayers as the board continues its work.
The Rev. Tina Thomas, a full elder in the Greenwood District, supports keeping pension benefits for part-time pastors.
Although I know budget cuts are the norm in these difficult economic times, I think part-time pastors should receive benefits, because it is virtually impossible to work part-time hours as a pastor, no matter what your official designation is.
The Rev. M.A. Williams, a part-time local pastor who serves Silas UMC in the Orangeburg District, said his past experience in corporate America has taught him that continuing to provide pension to part-time pastors is cost-saving in itself “ the more participants you have in a pension, the less expensive it becomes for everyone involved.
My basic logic is that we continue to allow part-time locals to participate in the pension program since this can only help to defray the cost factor, Williams said.
Willie Lawson, a retired supply pastor who serves the Asbury/Clio Charge in the Marion District, thinks part-time pastors should definitely be included in the pension plan.
Far too long they have served but been left out, given a few breadcrumbs at a time, Lawson said.
The Rev. Angela Ford Nelson, a part-time pastor who serves Mount Zion UMC, Bishopville, said she would not miss having additional pension benefits with the conference because she has a pension plan with her other employer. She is contributing to the conference s retirement plan.
Full-time elders and provisionals have done a lot of work to get to where they are, Nelson said. I feel that this benefit is something that they have earned, and one day I will reap the ˜benefits as well.
Look for an article in the next Advocate on the conference BPHB s recommendation.
Retired S.C. pastors to get new health plan
Retired S.C. United Methodist pastors, and the S.C. Conference itself, could pay a lot less for health insurance next year under a new vendor. And if approved, the move would also provide a health benefit for those retiring after Annual Conference 2015, who currently are not slated to have insurance through the conference.
The conference is hoping to switch retiree health plans to AmWINS, a wholesale insurance company, instead of the plan offered through the General
Board of Pension and Health Benefits.
It s pretty much the same benefits for less money, said the Rev. David Anderson, S.C. conference pensions and health benefits officer. We re going to a fully insured plan that allows us to take advantage of Medicare Part D.
The existing plan brings 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 s estimated cost is just $284/month per participant, Anderson said, and would feature a flat fee instead of a percentage. The conference would provide $200/month, while the participant would pay $84.
For those seeking even cheaper insurance, an economy plan option would also be offered, Anderson said, or people can have the option of taking the $200 flat fee from the conference and using it toward another market plan.
It gives a lot more flexibility, Anderson said. And by lowering the cost, it allows us to continue to provide a health benefit for those retiring after Annual Conference 2015.
The S.C. Conference Board of Pension and Health Benefits has recommended this plan, which will go before the full Annual Conference for a vote in June.
Pension benefit to see 20 percent formula reduction for 2014
A change in the formula used to calculate pastors pension benefits is on the horizon, and it is likely to save churches some money.
The General Board of Pension and Health Benefits is implementing a 20 percent reduction in the formula starting in 2014, said the Rev. David Anderson, S.C. conference pensions and health benefits officer.
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 slated to change is the amount churches are expected to contribute toward a pastor s pension, Anderson said. 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 (the pastor would likely reimburse the church for that 1 percent).
Anderson called this modified Clergy Retirement Security Program CRSP Lite.
The purpose is to make it more affordable for churches, Anderson said, citing tough economic times and a need to be more fiscally responsible.
Anderson thinks the cost savings could also help the conference collect more of the money owed them through direct billing. In 2002, the conference stopped paying pastor insurance and pension premiums out of apportionments and instead began to directly bill the individual churches for their pastor s coverage. However, some churches do not pay some or all of their direct billing, thus owing the conference money. (See related article. )