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Holy Week resources and reflections

BOP reviewing policies on reserves, governance

In an effort to maintain members' trust and sustain its reputation, the Board of Pensions (BOP) of the Presbyterian Church (U.S.A.) is reviewing several of its guidelines and policies.

The self-review takes in everything from the pension plan's contingency reserve to how it recruits and trains prospective members and governs itself. "Every few years, we undertake significant review, especially of the valuation methodology for the pension plan and the death and disability plan," said Robert W. Maggs Jr., the board's president and CEO. "We are trustees ... for over $6.5 billion dollars, and over 56,000 people count on us for their benefits or financial assistance. We can't risk reputational harm because of non-compliance or a bad governance process."

With that in mind, the 32-member board of Presbyterian clergy and lay members from throughout the United States is at both ends of the microscope.

(PNS) In an effort to maintain members’ trust and sustain its reputation, the Board of Pensions (BOP) of the Presbyterian Church (U.S.A.) is reviewing several of its guidelines and policies.

The self-review takes in everything from the pension plan’s contingency reserve to how it recruits and trains prospective members and governs itself. “Every few years, we undertake significant review, especially of the valuation methodology for the pension plan and the death and disability plan,” said Robert W. Maggs Jr., the board’s president and CEO. “We are trustees … for over $6.5 billion dollars, and over 56,000 people count on us for their benefits or financial assistance. We can’t risk reputational harm because of non-compliance or a bad governance process.”

With that in mind, the 32-member board of Presbyterian clergy and lay members from throughout the United States is at both ends of the microscope.

A key area being examined is how the board decides whether the pension plan has the appropriate amount of money in reserve.

Contingency reserves — how much money the plan has left after meeting all its obligations — has been a key issue over the past several years.

In 2003 and 2002, there were no experience apportionments — increases in retired members’ pensions and active members’ pension credits based on stock market performance and reserve levels. An apportionment reduces reserves on hand. The 2005 experience apportionment, which also applies to disabled and inactive plan members, has been set at 3 percent. The apportionment was 2 percent in 2004.

Fleischer said the review was launched about a year ago because officials were concerned that the reserve might become under-funded: “We were saying, ‘We don’t want to get in that position if we can avoid it.'”

The subcommittee handling the reserve review, which also includes members of the BOP investment committee, expects to present its results to the full board in July and to make its recommendations during the BOP’s October meeting.

Also under scrutiny is how the board governs itself — specifically, how it recruits new members. For several months, a task force appointed by BOP Chair Earldean V. S. Robbins has been examining governance and board development issues. ” … One of the particular facets that we needed to be concerned with is getting board members that have particular skill sets,” said Jefferson K. Aiken Jr., the task force chair. It is important for directors to have skills in actuarial sciences, finance, investments and health care, Aiken said.

Directors now are recommended by the General Assembly Nominating Committee for General Assembly approval. “We’re not dissatisfied … with what the General Assembly Nominating Committee has done,” Aiken said, “but we would like to perhaps work in collaboration with the nominating committee a bit more in attempting to get people … with areas of special expertise.”

During its meeting in March, the BOP approved a task force recommendation of a new Board of Directors Development and Governance Committee to develop board leadership and examine governance issues. This new group would replace the BOP’s nominating committees. The next step, Aiken said, is for Jean Hemphill, the BOP’s legal counsel, to draft amendments to the BOP bylaws to empower the new committee.

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