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Board of Pensions grants 4.6% experience apportionment

by Jerry L. Van Marter

PHILADELPHIA (PNS) Buoyed by a 17.1 percent return on its balanced investment portfolio in 2013, the Presbyterian Church (U.S.A.) Board of Pensions (BOP) voted here March 1 to approve a 4.6 percent experience apportionment, the largest such increase since 1999.

Experience apportionments are percentage increases in pensions for retired Pension Plan members and in pension credits for active Plan members. Last year ― after four years of no apportionments during the global economic collapse ― the board granted a 1 percent apportionment.

Apportionments are considered each year by the board and are calculated on a formula based on investment performance and reserve levels in the PC(USA)’s pension fund. The board maintains a minimum “funded status” of 110 percent of the pension fund’s present and future liabilities.

The board also granted a disability benefit increase of 2 percent for members receiving disability benefits on Dec. 31, 2013. This increase, which takes effect July 1, 2014, is the 14th increase in 16 years, each intended to help offset increases in the cost of living.

The assets and liabilities of the Death and Disability Plan are evaluated independently of the other plans administered by the Board of Pensions. In considering the decision, the Directors reviewed investment and actuarial experience, reserves, and cost-of-living and average salary changes.

Judith Freyer, senior vice-president for investments, and Jacqueline Jenkins, chair of the board’s Investment Committee, summarized the board’s 2013 investment performance. A full report is available at 2013 Investment Review: Who Is in Charge? Shakespeare, Bonhoeffer and Noble.

In addition to the 17.1 percent return for 2013 ― which added more than $1 billion to the board’s portfolio, bringing it to $8.5 billion ― Jenkins said “it is even more impressive that we have exceeded all benchmarks for the one, three, five, 10, 15, and 20 years ended Dec. 31, 2013.”

No changes were proposed in the BOP’s Healthcare Plan, but officers and the board’s Healthcare Committee are keeping a close eye on healthcare spending trends, the impact of the Affordable Care Act on the plans ― particularly the roll-out of public and private insurance-purchasing  exchanges ― and the new dues structure that goes into effect Jan. 1, 2015.

“It’s clear new exchanges are going to grow in use, if not popularity,” senior vice-president for benefits Patricia Haines told the board’s Healthcare Committee. “We’ll have to assess whether these have a place in our world ― we’re talking to other church plans and employers … including the possibility of setting up a private exchange.”

The committee spent considerable time with Michael Thompson of Price Waterhouse Cooper, who specializes in the impact of the Affordable Care Act on organizations such as the Board of Pensions.

Stewart Beltz, director of health and welfare, highlighted the features of the BOP’s new “Call to Health” initiative, which “is designed to help improve your overall health by encouraging you to make the most of your preventive care benefits and by identifying and managing chronic conditions.”

The initiative makes it possible for Healthcare Plan members to reduce their individual and family deductibles for 2015 by completing a few “specific health actions” by the end of this year.

Two are required: a preventive physical examination and telephonic coaching with a plan nurse, if contacted, for those with a moderate or severe chronic condition or health risk.

Two others must be completed from a list that includes a “health assessment,” recommended lab tests, a vision exam, a tobacco cessation program (if applicable), and participation in a Presbyterian CREDO Conference.

“I’ll be disappointed if half our members don’t take advantage of this incentive,” Beltz said.

The board heard a report from President/CEO Robert W. Maggs and BOP General Counsel Jean Hemphill that the board will ask the upcoming General Assembly to refer to the Mission Responsibility Through Investment Committee (MRTI) a number of overtures calling for divestment within the next five years of all stock in fossil fuel companies.

Echoing comments Freyer ― who represents the BOP on MRTI ― made at the recent MRTI meeting in New York, Maggs said, “The normal MRTI process is the most appropriate way to deal with the fossil fuel overtures … MRTI has stressed the importance of climate change since the 1980s ― the overtures are consistent with that. We own some shares in ExxonMobil but they don’t know that and don’t care, so any action we would take to divest would have no effect on global warming.”

Hemphill said “the debate is on the most effective strategy for engaging companies in seeking change. We ought to be using the MRTI process and identifying individual companies for action.”

Maggs added: “Buying and selling stock really has no impact on corporations. These (divestment) arguments have missed the mark if the goal is to change corporate behavior.”

In other business the board:

  • Elected new officers for 2014-2015: John W. Hamm of Dallas, Chair; the Rev. Lindley G. DeGarmo of Baltimore, First Vice-chair; and Judith A. Harris of Allentown, Pa., Second Vice-chair.
  • Honored nine board members who will conclude their service at the end of the 2014 General Assembly, June 14-21 in Detroit: the Rev. Brian D. Ellison of Kansas City, Mo.; the Rev. Samuel D. Kim of Wanaque, N.J.; Christopher Mason of New York City; Thomas C. Paisley of Center Valley, Pa.; Carol Sheffey Parham of Annapolis, Md.; Stephen E. Proctor of Dillsburg, Pa.; Dr. Paul B. Volker of Boone, Iowa; Dr. Lawrence A. Wright of Houston; and Frank C. Spencer, who is resigning from the board to become President and CEO.