United Methodist clergy now have a new pension program.
Delegates to the 2004 General Conference voted the program to provide “the denomination with the best practices of major corporations” by combining the characteristics of a defined benefit and a defined contribution plan.
In a vote of 615-215, delegates approved the new program to provide “security with choice.” There are two components to the program offered by the United Methodist Board of Pension and Health Benefits.
The first is a defined benefit program that provides the same benefit to all clergy across the church, based on a formula of 1.25 percent of the Denominational Average Compensation multiplied by years of credited service.
The new program also has a defined contribution component of 3 percent of actual compensation, which allows participants to accumulate cash in a self-directed individual account. The two components are to be funded by the annual conference and would become effective Jan. 1, 2007.
It also is recommended that church lay workers receive pension contributions of 3 percent of actual compensation, effective Jan. 1, 2006.
The board administers at least nine pension, relief or benefit programs created before 1981 in either the United Methodist Church or its two predecessor denominations, the Methodist Church and the Evangelical United Brethren Church, which united in 1968. Some retirees today benefit from both the current plan, known as the Ministerial Pension Plan, established in 1982, and from one or more of the prior plans. The latter are referred to collectively as “pre-82.”
“This is a very fair plan for all clergy throughout all of our jurisdictions,” said Verna McKinney, Kentucky Annual (regional) Conference. She observed the six different ways that contributions are made to the ministerial pension plan and how differences vary from conference to conference.
Also agreeing with the plan during assembly debate was Penney Schwab, Kansas West. Calling it fair and balanced, she said it “does the most good for the most clergy. It equitably shares the responsibility for pension security for our clergy.”
But Fred Haustein, Arkansas, disagreed. “I believe the plan is inadequate. It is not our best stewardship to produce the result we want for our pension responsibility,” he said.
Haustein referred to a study noting that if the church had been participating in this plan for the last 20 years, the benefit would have been a $10,808 annual pension compared to the current plan of $13,464.
Before the vote, Joel Huffman, Desert Southwest, told the delegates that the plan would stop the growing liability under the ministerial pension plan for annual conferences and allow annual conferences to reduce pension costs. He also said the new plan would allow reserves to be freed up for the medical expenses of retirees and minimize the risk for clergy at the most vulnerable times of their lives in retirement.
After approval, delegates asked the Judicial Council, the denomination’s supreme court, for a declaratory decision on the legality and constitutionality of the plan. The council deferred the requests for a decision until its fall meeting.
A similar plan for staff of United Methodist agencies also was approved by General Conference.
*Green is a United Methodist News Service news writer.
News media contact: (615) 742-5470.
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