Board of Pensions grants 4.6% experience apportionment

Increase in church workers’ pensions is largest since 1999

March 6, 2014


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.
  1. The strategy to divest has nothing to do with convincing the fossil fuel companies to change their practices directly. Rather, as the church we act as the moral conscience of the nation and humanity. We speak the truth and do so prophetically when called to speak prophetically. Divestment is about speaking the truth to the public and thus to sway public opinion. Only when the public sees the truth will the outcry be great enough for change to take place. Only when the public's conscience is convinced that we need to do things differently will the outcry be great enough that companies will listen. Only when people of courage are willing to demand change because of what they now know will our future be made secure. Our message is not to the fossil fuel companies but to the hearts of people willing to embrace the truth. Deep down people want to follow the truth, and as long as we continue to speak it, the truth will be heard and can no longer be denied.

    by Rev. Paul Henschen

    March 14, 2014

  2. Divestment from fossil fuel companies – and re-investment in sustainable, community-based energy efficiency and renewable energy initiatives -- represents a tremendous opportunity for the PC(USA) to stand in solidarity with poor communities that are suffering the negative effects of climate change and fossil fuel extraction on their health and livelihoods, with young people and future generations that will need to adapt to climate change, and with the ecosystems that God calls “very good” (Genesis 1:31) and has entrusted to our care. As a young person seeking to be faithful to God’s call to care for the Earth and love my neighbors (those next door and those across oceans!), I want to give my “energy, intelligence, imagination, and love” -- and yes, my tithes – to a church that has the courage invest all my gifts in ways that heal, rather than harm, the Earth and its people. Sisters and brothers, climate change is too urgent a problem for incremental action. The Intergovernmental Panel on Climate Change predicts that climate change will threaten agriculture and food security, stress water supplies, harm public health, and increase vulnerability to disasters around the world. As a returned Peace Corps Volunteer (El Salvador 2004-2008), I have seen families that I love lose precious harvests to erratic weather patterns that disrupt their agricultural systems. The greater the rise in global average temperature, the more severe such impacts will be. Our nation and world must take bold, swift action to drastically reduce greenhouse gas emissions (GHG) – first and foremost, by reducing fossil fuel use, which contributes the majority of GHG emissions that cause climate change. Thus far, policy advocacy and international negotiations have been woefully insufficient to affect the large-scale changes in energy use and sources (i.e., a shift to renewables) that are needed to ensure a sustainable future for life on Earth. As part of a global movement, divestment by the PC(USA) can accelerate this process. Divestment will build public awareness and political will to regulate GHG emissions and fossil fuel use, and free financial resources to invest in energy efficiency and renewable energy solutions.

    by Megan M. Gregory

    March 10, 2014

  3. At personal cost I sold Exxon, a legacy from my Grandfather. I used the money to buy solar power generation. I did this to get rid of electric power bills as well as to protect my children and grandchildren. If my church is unwilling to protect the poor, needy and neglected, I a, in the right place. According to Genesis, we are to have authority over the earth. I was always taught that meant responsible for our actions. Divestiture is about responsibility and our church should divest in fossil fuels as it has in cigarettes, alcohol and gambling. It is about morals and responsibility not money.

    by Dale Tullier

    March 8, 2014

  4. Robert Maggs said "Buying and selling stock really has no impact on corporations." If the Presbyterian church takes the prophetic stand, as a national body, that they cannot, morally, remain invested in companies whose products are destroying creation, this will make an impact on the public image of these corporations. Further, there is strength in numbers. It will make an impact if the national Presbyterian church joins an international divestment movement of hundreds of universities, cities, counties and other religious denominations

    by Susan Chamberlain

    March 7, 2014

  5. We should divest because it's a powerful form of speech. For better or worse, people take notice when churches divest! Divestment aligns our actions with our words, and is one step in the urgent task of turning from fossil fuels. It doesn't matter if Exxon cares (although, in fact, they do) - we need to put our money in the right place, and encourage others to do the same.

    by Cheryl Pyrch

    March 7, 2014

  6. While it may result in some short-term shake up of investing strategies, I'm confident that it will be the best move for our children's future if we remove our investments from fossil fuel entities - which are truly becoming the "horse and buggy" industries of our day. Share-holder discussions may be effective in some realms but NOT with greedy fossil fuel entities. We must send them a strong message by removing our funds from their grasp. As an example, I am aware that MRTI and other denominational reps were involved in stockholder discussions which led to Citi Bank's due diligence policy re: mountaintop removal coal mining. This policy is not worth paper is is written on (IF a hardcopy even exists) because Citi continues to finance highly destructive mountaintop removal operations with very little, if any, change.

    by Robin Blakeman

    March 7, 2014

  7. Maggs said "MRTI has stressed the importance of climate change since the 1980s" That's the problem. The typical MRTI approach of phased selective divestment and shareholder engagement isn't working. Climate change won't wait. Isn't it past time to try something different? Hemphill said “the debate is on the most effective strategy for engaging companies in seeking change." No it isn't. The debate is on the morality of investing in and profiting from companies whose business plan will destroy the climate and inflict great hardship on developing countries. Maggs added: “Buying and selling stock really has no impact on corporations." Then why not sell, since it has also been shown to have no impact on ROI?

    by Dan Terpstra

    March 7, 2014

  8. Someone needs to tell Robert Maggs that the PC(USA) is a church that answers to the Gospel of Jesus Christ and not Wall Street. To argue against divestment by saying that it does not work in regard to changing corporate behavior is beside the point (although the argument that it does not change such behavior is very arguable). Mr. Maggs, the point is that because we are disciples of Jesus Christ and children of the Kingdom of God we do our utmost best not to invest in injustice, and not to make a profit from human misery. That's why we divest. While it may be our hope that perhaps corporate behavior might change, that is not the primary reason. It is the people in the churches where we pastors serve who send the BOP, on our behalf, the millions it invests. Every week we do our best to teach these people such passages as Matthew 6:21, "For where your treasure is, there your heart will be also." If our treasure is in occupation and human rights violations, then our heart is there as well. Unless, of course, you don't understand or value what Jesus actually said. We are seeking to change the heart of an institution that thinks that when it grows up it would like to be part of the Fortune 500. No, Mr. Maggs, we are a church and when we put you in charge of our financial resources we expect you to act in accordance with a whole different set of rules: They are called the Sermon on the Mount.

    by Rev. Dr. Jeffrey DeYoe

    March 7, 2014

  9. Maggs misses the mark by failing to acknowledge the moral imperative in divestment from fossil fuels. If it's wrong to wreck the climate, then it is wrong to profit from that wreckage.

    by Rick Johnson

    March 6, 2014

  10. We who live on fixed incomes are so grateful for our Board's careful stewardship. God is good! Thank God and thank you all! LSL

    by Louis S. Lunardini, Honorably Retired

    March 6, 2014