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Those New to Ministry Mississippi Annual Conference August 16, 2010

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.

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Those New to Ministry Mississippi Annual Conference August 16, 2010

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  1. Those New to Ministry Mississippi Annual Conference August 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. Provisions for RetirementThe Book of Discipline ¶358 Normal Retirement • Age 65 or 40 years of service Mandatory retirement • Age 72—effective January 1, 2009 Early Retirement • Age 62 or 30 years of service—effective January 1, 2009 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. Reverend John Smith1234 Nowhere StreetChicago, Illinois 12345 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)

  8. Retirement Plans Clergy Retirement Security Program (CRSP) Pre-82 Plan(Ministerial Reserve Pension Fund) 1982-2006Ministerial Pension Plan (MPP) 2007+ CRSP United Methodist Personal Investment Plan (UMPIP)

  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 Security Choice/Flexibility + Defined Benefit(DB) Defined Contribution(DC)

  11. Defined Benefit Component Monthly 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, 2007 Example for 2013 retirement .0125 x $65,000 (hypothetical DAC) x 6.5 years= $5,281 ÷ 12 = $440 per month

  12. Secure regardless of market fluctuations Defined Benefit Advantages A benefit for life

  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. Provides choiceand flexibility Potential for investment growth Cash at retirement Defined Contribution Advantages

  15. General Board Retirement Plans Clergy Retirement Security Program (CRSP) Pre-82 Plan(Ministerial Reserve Pension Fund) 1982-2006Ministerial Pension Plan (MPP) 2007+ CRSP United Methodist Personal Investment Plan (UMPIP)

  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. UMPIP • 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

  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. IEF USEF 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 MAF Risk FIF IPF SVF Return Potential Investment Options

  21. UMPIP Unitized FundsExpense Ratio Comparison 3.00 413 Foreign Stock Funds 753 Funds with Balanced Objective 1,417 Growth and Income Funds 1,773 Multi-Asset Class Funds 1,151 Short, Intermediate, And Long-Term Bond Funds 2.50 119 Inflation Protection Funds 238 Short-Term Bond Funds 2.00 1.50 1.00 0.87 0.80 0.70 0.50 0.49 0.49 0.42 0.37 0.00 SVF IPF FIF BSVP MAF USEF IEF Source: Wilshire Compass and Lipper as of 03/31/09

  22. 1.8% SVF IPF DBF MAF BSVPF DSF ISF General Board Competitive ReturnsYear-to-date July 23, 2010 2.6% 5.9% 2.0% 1.4% 1.4% -1.6%

  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. Target Fund Allocation Risk Tolerance Age GBOPHB Account Balances Age at Retirement ▪ Fixed Income Fund ▪ Inflation Protection Fund ▪ U. S. Equity Fund ▪ International Equity Fund ▪ Stable Value Fund Social Security Eligibility Value of Social Security Benefits LifeStage: Fund Selection Feature

  26. Before Actual Fund Allocations After Actual Fund Allocations 14% 13% 13% 13% 29% 27% 26% 34% 17% 14% ▪ Fixed Income Fund ▪ Inflation Protection Fund ▪ U. S. Equity Fund ▪ International Equity Fund ▪ Stable Value Fund ▪ Fixed Income Fund ▪ Inflation Protection Fund ▪ U. S. Equity Fund ▪ International Equity Fund ▪ Stable Value Fund No participant intervention required LifeStage: Rebalancing Feature

  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) 2010

  31. CPP Special Arrangements • Sabbatical * • Attending school * • Voluntary Leave (family, personal, transitional) * • Incapacity Leave * • Involuntary Leave * • Less-than-full-time * • Compensation less than 60% *

  32. CPP Death Benefits 2010 Active: $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. Interactive Voice Response (IVR) System Web Site: www.gbophb.org Online Account Services Information System (OASIS) Customer Service Representatives: 1-800-851-2201 Other Retirement Planning Resources

  37. www.gbophb.org

  38. 1-800-851-2201 www.gbophb.org

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