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Those New to Ministry Mississippi Annual Conference August 16, 2010. Presented by: Ron Coleman. Overview. Terms Retirement Provisions Retirement Plans LifeStage Investment Management Service ( LifeStage ) Comprehensive Protection Plan (CPP) Ernst & Young Financial Planning Services. - PowerPoint PPT Presentation
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Caring For Those Who Serve
Those New to MinistryMississippi Annual ConferenceAugust 16, 2010
Presented by:
Ron Coleman
2
Overview
• Terms• Retirement Provisions • Retirement Plans • LifeStage Investment Management
Service (LifeStage)• Comprehensive Protection Plan
(CPP)• Ernst & Young Financial Planning
Services
3
General Board of Pension and Health Benefits
• Not-for-profit organization
• Over $16 billion in assets
• Currently serving 74,000 participants
• Largest denominational pension fund
4
Mandatory retirement• Age 72—effective
January 1, 2009
Provisions for RetirementThe Book of Discipline ¶358
Early Retirement• Age 62 or 30 years
of service—effective
January 1, 2009
Normal Retirement• Age 65 or 40 years
of service
20-Year Retirement
5
Denominational Average Compensation (DAC)
• Average plan compensation of United Methodist clergy serving full-time appointments
• 2010: $60,341
• 2011: $61,716
6
Conference Average Compensation (CAC)
• Average annual compensation of United Methodist clergy serving full-time appointments related to a specific conference
• 2010 = $59,379
• 2011 = $60,158
7
Annuity
• A stream of payments
• Period certain (term) annuity = benefit paid over a guaranteed period
• Life annuity = benefit paid for life (if joint = two lives)
Reverend John
Smith1234 Nowhere
StreetChicago, Illinois
12345
8
Clergy Retirement Security Program (CRSP)
2007+
CRSP1982-2006Ministerial
Pension Plan (MPP)
Pre-82 Plan(Ministerial
Reserve Pension Fund)
United Methodist Personal Investment Plan (UMPIP)
Retirement Plans
9
Clergy Retirement Security Program (CRSP)
A new retirementplan, effective January 1, 2007 providing a core benefit at retirement with two components
10
Clergy Retirement Security Program
Defined Benefit
(DB)
Defined Contribution
(DC)
+
11
Defined Benefit ComponentMonthly payments, payable for life, calculated by multiplying the following and then dividing by 12:• 1.25%• DAC at time of retirement• Years of credited service from January 1,
2007Example for 2013 retirement
.0125 x $65,000 (hypothetical DAC) x 6.5 years
= $5,281 ÷ 12 = $440 per month
12
Defined Benefit Advantages
A benefit for life
Secure regardless of market fluctuations
13
Defined Contribution Component• Plan sponsor contribution of
3% of clergyperson’s plan compensation
• Account balance invested as directed by participant
• Available as cash distribution at retirement (or termination)
■ Full lump sum■ Partial lump sum■ Cash installment (e.g., monthly)
14
Defined Contribution Advantages
Cash at retirement
Potential for investment
growth
Provides choice
and flexibility
15
Clergy Retirement Security Program (CRSP)
2007+ CRSP
1982-2006Ministerial
Pension Plan (MPP)
Pre-82 Plan(Ministerial
Reserve Pension Fund)
United Methodist Personal Investment Plan (UMPIP)
General Board Retirement Plans
16
UMPIP Sources
• Before-tax contributions• After-tax contributions• Rollovers
■ 401(a)■ 401(k)■ 403(b)■ IRA
17
UMPIP Access
• In-service withdrawals■ Age 59½
• Hardship loans• Hardship withdrawals• Disability• Termination• Retirement
18
• Benefit choices■ Full lump sum■ Partial lump sum once per quarter■ Cash Installments■ Leave on account
• Flexibility to make changes• May pass on to heirs
UMPIP
19
Advantages of Investing Through the General Board• Socially responsible investing
• Competitive returns
• Low expense ratios
• Access to LifeStage Investment Management Service
• Uphold the values of The UnitedMethodist Church
20
Investment Options
SVF
IPF
FIF
MAF
USEF
IEF
BSVPF• Stable Value Fund• Inflation Protection Fund• Fixed Income Fund• Multiple Asset Fund
• Balanced Social Value Plus Fund
• U.S. Equity Fund• International Equity Fund
Ris
k
Return Potential
21
UMPIP Unitized FundsExpense Ratio Comparison
238Short-TermBond Funds
119Inflation
ProtectionFunds
1,151Short,
Intermediate,And Long-Term
Bond Funds
753 Funds with Balanced Objective
1,773Multi-AssetClass Funds
1,417Growth and
IncomeFunds
413Foreign Stock
Funds
0.370.49 0.49 0.42
0.700.80 0.87
0.00
0.50
1.00
1.50
2.00
2.50
3.00
SVF IPF FIF BSVP MAF USEF IEF
Source: Wilshire Compass and Lipper as of 03/31/09
22
General Board Competitive ReturnsYear-to-date July 23, 2010
1.8% SVF
IPF
DBF
MAF
BSVPF
DSF
ISF
5.9%
2.0%
1.4%
1.4%
-1.6%
2.6%
23
LifeStage Investment Management Service (LifeStage)
LifeStage Investment Management Service (LifeStage)—managed accounts
24
LifeStage
• Creates a customized investment portfolio for you
• Reviews asset allocation annually
• Rebalances your account as needed
• Allows you to focus on other things
Benefits:
25
LifeStage: Fund Selection Feature
Risk Tolerance
Age
GBOPHBAccount Balances
Value of Social
Security Benefits
Age at Retirement
Social Security Eligibility
▪Fixed Income Fund
▪ Inflation Protection Fund
▪U. S. Equity Fund
▪ International Equity Fund
▪Stable Value Fund
Target Fund Allocation
26
LifeStage: Rebalancing Feature
Before Actual Fund Allocations
After Actual Fund Allocations
No participant intervention required
▪ Fixed Income Fund▪ Inflation Protection Fund▪ U. S. Equity Fund
▪ International Equity Fund▪ Stable Value Fund
13% 13%
34%14%
26%
14%
29%
17%
27%
13%
▪ Fixed Income Fund▪ Inflation Protection Fund▪ U. S. Equity Fund
▪ International Equity Fund▪ Stable Value Fund
27
Comprehensive Protection Plan
Death and Disability
28
Comprehensive Protection Plan
• Mandatory welfare plan
• Effective January 1, 1982
• Provides death, disability and survivor benefits for clergy
29
CPP General Eligibility Requirements
• Under Episcopal appointment
• 60% of DAC or CAC (whicheveris less)
• Full-time
• PTLP and STLP not eligible
30
CPP Contribution Rate
3% of compensation not to exceed 200%
of the DAC ($120,682)
31
• Sabbatical * • Attending school *• Voluntary Leave (family, personal,
transitional) * • Incapacity Leave *• Involuntary Leave * • Less-than-full-time * • Compensation less than 60% *
CPP Special Arrangements
32
CPP Death Benefits 2010Active: $50,000
Retired: 30% of DAC ($18,102)
Spouse: 20% of DAC ($12,068)
Surviving spouse: 15% of DAC ($ 9,051)
Child: 10% of DAC ($ 6,034)
33
CPP Disability Benefits
• 70% of plan compensation; plan compensation capped at 200% of DAC ($120,682)
• Offset by Social Security disability benefits
34
Ernst & Young Financial Planning Services
Financial Planning
1-800-360-2539
35
Consultation Topics
• Creating a retirement plan• Choosing retirement plan
investments• Buying a home• Developing an estate plan• Managing debt• Funding children’s education• Evaluating insurance needs and
options
36
Other Retirement Planning Resources
Web Site:www.gbophb.o
rgOnline Account
Services Information System
(OASIS)
Customer Service
Representatives:
1-800-851-2201
Interactive Voice Response
(IVR) System
37
www.gbophb.org
38
39
40
1-800-851-2201www.gbophb.org