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U.M. Benefits Review (with General Conference changes) Missouri Annual Conference August 9, 2013

U.M. Benefits Review (with General Conference changes) Missouri Annual Conference August 9, 2013. Presented by: Mark Conner. Agenda. Retirement provisions (unchanged) CPP (death & disability) eff. 2013 General Board retirement plans eff. 2014 Services: LifeStage Investment Service

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U.M. Benefits Review (with General Conference changes) Missouri Annual Conference August 9, 2013

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  1. U.M. Benefits Review (with General Conference changes) Missouri Annual Conference August9, 2013 Presented by: Mark Conner

  2. Agenda • Retirement provisions (unchanged) • CPP (death & disability) eff. 2013 • General Board retirement plans eff. 2014 • Services: • LifeStage Investment Service • LifeStage Retirement Income Service (new) • Ernst & Young Financial Planning Service

  3. Provisions for RetirementThe Book of Discipline ¶358 • Normal retirement • Age 65 or 40 years of service • Early retirement • Age 62 or 30 years of service • Mandatory retirement • Age 72

  4. Comprehensive Protection Plan Death and Disability

  5. Comprehensive Protection Plan • Death and disability benefits • Active • Retiree • Educational benefits for surviving children • Eligibility requirements • Full-time: Compensation • Others by conference elective arrangements

  6. Denominational Average Compensation (DAC) • Average plan compensation of United Methodist clergy serving full-time appointments • 2013: $63,867 • 2014: $65,186 • 2015: $66,259

  7. Plan Compensation Taxable cash salary: $27,000 + 125/403(b) reduction: $ 5,000 + Housing allowance OR + Parsonage: (25%) $ 8,000 = Total $40,000

  8. Long-Term Disability Plan Benefits Definition • Unable to perform duties due to injury or illness for at least 6 continuous months Disability Amount • 70% of pre-disability plan compensation (housing + cash salary) • Plan compensation not to exceed 200% of the DAC • Minimum benefit amount equal to 40% of the DAC

  9. Disability Benefit Changes • Return-to-work incentives • Mental-nervous benefit limitation • Benefit duration schedule after age 62

  10. Post Incapacity Earnings – G C changes Monthly benefit can go below 40% DACdue to other income offset

  11. Return-to-Work, GC changes

  12. New Benefit Duration Schedule Benefit duration schedule* aligned with Social Security Normal Retirement Age * Cases of mental nervous limitation: lesser of maximum duration or 24 months

  13. CPP Death Benefits 2013 (Active) Active: $50,000 Spouse: 20% of DAC ($12,773) Surviving spouse: 15% of DAC ($ 9,580) Child: 10% of DAC ($ 6,387)

  14. CPP Eligibility Retiree death benefit eligibility rules • Effective January 1, 2013 • 25 years of service or, • At least 12 of 15 years immediately prior, phasing in • 2013, 6 0f 10 • 2014, 7 of 10, etc. • 2019,12 of 15

  15. CPP Retiree Death Benefits 2013 Retired Participant: $20,000 Spouse: $15,000 Surviving spouse: $10,000 Child: $ 8,000

  16. Beneficiary Designation • Beneficiary designations are required for retirement and welfare plans, and supersede will provisions • Update at times of change • Birth or adoption of a child, marriage, divorce or death • Can make separate designations for CRSP *,UMPIP and CPP • * CRSP covers the MPP account (before set-up) as well

  17. General Board Retirement Plans Clergy Retirement Security Program (CRSP) 2014+ CRSP Pre-82 Plan(Ministerial Reserve Pension Fund) 1982-2006Ministerial Pension Plan (MPP) 2007-2013 CRSP United Methodist Personal Investment Plan (UMPIP)

  18. Clergy Retirement Security Program + Defined Contribution(DC) Defined Benefit(DB)

  19. Part-Time Service for the DB Component • CRSP not available to 25% appt’s 1-1-2014 • Missouri (New 2014) recommendation for local church contribution to UMPIP • Credited service based on appointment percentage (75% or 50%) and . . . • Adjusted if only a portion of a full year served

  20. CRSP Credited Service Example for the DB Component CRSP credited service example: Period Church Appt. % Credit 01/01/07 – 06/30/08 First UMC 100% 1.5 07/01/08 - 09/30/08 Wesley 100% .25 10/01/08 - 06/30/09 Pastoral 0% 0.00 Counselor 07/01/09 - 06/30/10 Highland 50% .50 07/01/10 - 12/31/10 Christ 50% .25 Total CRSP-DB credit 2.50

  21. CRSP Defined Benefit Component― Service Before 2014 Monthly payment, 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 until December 31, 2013 Example for 2020 retirement .0125 x $80,000 (hypothetical DAC) x 7 years = $7500 ÷ 12 = $625 per month

  22. CRSP Defined Benefit Component― After 2013 Monthly payment, payable for life, calculated by multiplying the following and then dividing by 12: • 1.0% • DAC at time of retirement • Years of credited service after January 1, 2014 Example for 2020 retirement .01 x $80,000 (hypothetical DAC) x 7.5 years = $6,000 ÷ 12 = $ 500 per month

  23. CRSP Defined Benefit Component Example: 2007 to 2020 2020 retirement Total benefit= 625 + 500 = $1,125 per month • Initial dollar amount of the benefit • will be reduced to offset the value • of spousal coverage. (credit > 2014) • Choice of cost-of-living increase • Reduction for early retirement

  24. CRSP Formula Benefit Actuarial reduction for early retirement: ½ % for each month or fraction of a month retirement begins in advance of normal retirement Example: • Age 63 ½ with less than 38 years of service • One and ½ years from full retirement • ½ % per month for 18 months = 9 % reduction

  25. CRSP Defined Benefit • Benefit automatically increases by 2% each year after retirement • Alternative survivor option and cost-of-living increases available at retirement • Surviving spouse benefit equalto 70% of deceased participant’s credited years benefit for 2007-13 • For credited years starting 2014, retiring participant can elect surviving spouse benefit option

  26. Defined Contribution Component • Contribution equal to 3% annuallybased on plan compensation • Matching starting January 1, 2014 (2% contribution plus 1% match if participant contributes at least 1% to UMPIP) • Account balance invested as directedby the participant • Available as a cash distribution (partial, full or cash installments) • Remaining balance to beneficiary at death

  27. CRSP: DC Component Effective thru December 31, 2013 CRSP DC 3% Non-match Effective January 1, 2014 2% Non-match 1% Match* * 100% of UMPIP contributions up to 1% of compensation

  28. Matching Contributions Participant Before-Tax/After-Tax Contributions 2%Non-Match 1%Match UMPIP CRSP DC

  29. UMPIP Sources • Before-tax contributions • After-tax contributions • Rollovers • 401(a) • 401(k) • 403(b) • IRA (traditional)

  30. Updating Your Monthly Contribution • Before-Tax and After-Tax Contributions Agreement • Percentage or dollar amount • Can increase or decrease throughout the year

  31. 2013 Elective Contribution Limits 402(g): $17,500Catch-up (age 50+): $5,500 415(c) lesser of includable compensation or $51,000* * See IRS Publication 571 regarding 15-year rule

  32. Before-Tax or After-Tax Contributions Before-Tax • No federal income tax (currently) • No SECA (Social Security) After-Tax • Pay federal income tax • Pay SECA (Social Security)

  33. UMPIP Access • In-service withdrawals • Age 59½ • Hardship loans • Hardship withdrawals • Disability • Termination • Retirement

  34. United Methodist Personal Investment Plan Distributions • Benefit choices • Full lump sum • Partial lump sum • Cash installments • Leave on account • Must begin to take distributions later of: • Retirement (age 72 on/before July1) • April 1 following attainment of age 70½ • Sign up for LifeStage Retirement Income • Use “Benefits Access”

  35. LifeStage Retirement Income • Converts defined contribution account balances into monthly income • Adjusts payments annually for inflation • Keeps payments within the “payment safety zone” • Offers excellent probability of lifetime income, but no guarantee

  36. Advantages of LifeStageRetirement Income • Alternative for non-annuitized MPPbalance • Annuitization limited to 65% of MPP account after December 31, 2013 • Counters retirement tendency to overspend or underspend • Balance is left to beneficiaries • Participants may opt out at any time • Investments managed by LifeStage

  37. LifeStage Retirement Income Annual Process Payment Safety Zone • Annual adjustment calculated each November & reflected in January payment • Participant receives letter detailing change in payment • Payments are generally expectedto increase—but a decrease is possible $758 / month

  38. LifeStage Retirement Income

  39. Enrollment—Consolidate

  40. Enrollment—Set Aside Money

  41. Benefits Access Enhancements LifeStage “Do It Yourself” installment payment tool

  42. 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)

  43. New Lifetime MPP Options: Effective 1-1-2014 *** • Exactly 35% of balance must be: • Rolled over to UMPIP or other retirement plan • Taken as a cash distribution • Left on account until age 70½ or retirement (whichever is later) • Once rolled over to UMPIP, LifeStage Retirement Income Service is available *** Choices made AT retirement (or delayed til 70 ½ with required beginning date

  44. MPP Distribution Options: Life with Survivor Annuities Samples: Payable to Contingent Annuity Type Payable to You Annuitant Life with 100% $1,120 $1,120 Life with 85% $1,223 $1,039 Life with 70% $1,325 $ 927 Life with 50% N/A N/A

  45. MPP Distribution Options: Life Annuities Samples: Annuity Type Payable to You Life with 10-year certain $1,699 Life with 5-year certain $1,746 Life only $1,760

  46. Benefits Access • www.benefitsaccess.org • Find current account information • Tools • Readiness • Retirement projection • Investment information • Beneficiary designations • Resources on finances and retirement

  47. UMPIP CRSP DC Pre’82 MPP CRSP DB Social security

  48. UMPIP CRSP DC Pre’82 MPP CRSP DB Social security

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