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Supplemental Pensions & Benefits Rocky Mountain District June 28, 2012

Supplemental Pensions & Benefits Rocky Mountain District June 28, 2012. A Report from the Board of General Superintendents. It began in 1971. Who would begin an unfunded Pension Assistance Plan and provide benefits back to 1908? – We did!.

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Supplemental Pensions & Benefits Rocky Mountain District June 28, 2012

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  1. Supplemental Pensions & Benefits Rocky Mountain District June 28, 2012 A Report from the Board of General Superintendents

  2. It began in 1971 • Who would begin an unfunded Pension Assistance Plan and provide benefits back to 1908? – We did! • How could a plan survive with no equity investing for the first 20 years of its life? – Ours did! • Could a plan become fully funded in just 29 years? – It happened! HOW?

  3. Because • Little is much, when God is in it! • Your church stepped out on faith. • We’ve never missed a payment since the beginning in 1971!

  4. Clouds on the Horizon • 2002 began decade of disappointing investment returns – from 7% to 5.6% • “Bear” markets in 2002 and 2003 eroded trust assets of every pension plan, public or private. • During this period, P&B subsidized deficiencies from its own reserves.

  5. A Perfect Storm • More clergy began moving into retirement • Increased life expectancy • During this decade, P&B raised payouts to beneficiaries twice. • Increased financial pressure was felt by local churches, districts, etc.

  6. P&B Fund Balance IF WE DO NOTHING $14.7 million Assets depleted 2023 $5 million • Shown for illustrative purposes only, contributions are not recommendations Assumptions: (1) 2011 Trust Return: 0% (2) 2012 + Trust Return: 7% (3) Contributions: $5.0 M in 2011+

  7. If We Do Something… 7

  8. Forecasts - Cash Flow Review $8+ million until 2034 Fully funded By 2041 • Shown for illustrative purposes only, contributions are not recommendations Assumptions: (1) 2011 Trust Return: 0% (2) 2012 + Trust Return: 7% (3) Contributions: $5.0 M in 2011, $8.0M until 2032, actuarial recommendation thereafter

  9. BGS RECOMMENDATION ON P&B • The BGS consulted with U.S. DS’s, the Council on Higher Education, Dr. Don Walters, P&B Board members, & actuarial firm of Towers & Watson

  10. BGS Recommendations • Increase the budget formula for P&B from 2% to 2.25% effective April 1, 2012, reduce from 2.5% to 2.25% for universities. This would result in a net increase for P&B of $1.4 million. • Capital Reserve Fund and supplemental earnings could contribute $2 million. 11

  11. BGS Recommendations • P&B department savings = $250,000 annually. • U.S. Region-wide emphasis on 100% payment of all budget allocations. This could result in an $1.2 million. • These timely measures could result in an additional $4.85 million per year. 12

  12. BGS Recommendations • We appeal to every local church to pay 100% of their WEF, District, P&B, and Educational “shares for others.” • We honor NNU for accepting a decrease in their funding apportionment to help us meet this immediate need. Some districts and churches are attempting to continue 2.5% for NNU. 12

  13. For Your Information District: Rocky Mountain • Amount received from Pensions & Benefits to all beneficiaries last year: $164,859 • Amount contributed to Pensions & Benefits last year: $56,533 15

  14. Retired Ministers Will they find us faithful? THANK YOU, Rocky Mountain Nazarenes, for supporting our legacy builders!

  15. For Your Information District: Iowa • Amount received from Pensions & Benefits to all beneficiaries last year: $157,490 • Amount contributed to Pensions & Benefits last year: $115,007 15

  16. For Your Information District: Kansas • Amount received from Pensions & Benefits to all beneficiaries last year: $251,638 • Amount contributed to Pensions & Benefits last year:$206,626 15

  17. For Your Information District: Prairie Lakes • Amount received from Pensions & Benefits to all beneficiaries last year: $141,198 • Amount contributed to Pensions & Benefits last year: $128,965 15

  18. For Your Information District: Kansas City • Amount received from Pensions & Benefits to all beneficiaries last year:$624,911 • Amount contributed to Pensions & Benefits last year: $408,066 15

  19. Lift Up Your Eyes • We’ve been looking at the hills… • The hills of financial stress • The hills of global turmoil • The hills of spiritual adversity “I lift up my eyes to the mountains— where does my help come from? My help comes from the LORD, the Maker of heaven and earth.” –Psalm 121:1-2 13

  20. A Matrix of Possibilities * % of Budget represents required pay-as-you-go funding as a portion of the P&B budget expected in that year (assuming 2% annual growth.)

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