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Puerto Rico Methodist Church

Puerto Rico Methodist Church. Presented by: Manuel Vargas. Overview. PRCRSP Personal savings into PRPIP Investment returns Benefits Access tools Participant services Proposed change to PRCRSP defined benefit. PRCRSP: Defined Contribution Plan. EFFECTIVE 01/01/13. PRCRSP

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Puerto Rico Methodist Church

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  1. Puerto Rico Methodist Church Presented by: Manuel Vargas

  2. Overview • PRCRSP • Personal savings into PRPIP • Investment returns • Benefits Access tools • Participant services • Proposed change to PRCRSP defined benefit

  3. PRCRSP: Defined Contribution Plan EFFECTIVE 01/01/13 PRCRSP 11% Non-match PLUS 2% Match 2% UMPIP *100% of UMPIP contributions up to 2% of compensation

  4. PRUMPIP • Not all clergy making personal contributions • Not receiving the full 13% contribution (receiving 11%) • Missing out on the additional 2% contribution AND investment returns

  5. Investing Early Pays Off Years $ 1,000 per year at 7% average earnings

  6. Investment Options Stable Value Fund Inflation Protection Fund Fixed Income Fund Multiple Asset Fund Balanced Social ValuePlus Fund U.S. Equity Fund International Equity Fund

  7. General Board Competitive ReturnsYear-to-Date: December 31, 2013 SVF IPF FIF MAF BSVPF USEF IEF

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

  9. Before-Tax or After-Tax Contributions Before-Tax •Federal income tax deferred until distribution After-Tax •Pay federal income tax

  10. Deferred Taxation on Earnings The earnings on your account balance are not taxed until you begin taking your benefits

  11. 2014 Elective Contribution Limits Before-Tax Limit: $ 15,000Catch-up (age 50+): $ 1,500

  12. Savings Goal—$500,000 at Retirement* Age 35 • 30 years • $452 per month • Age 65: $500,000 • Age 45 • 20 years • $1,000 per month • Age 65: $500,000 *7% average rate of return and savings in retirement plan

  13. How Much Income Is Enough? Replacement ratio: • Percentage of current income you need to “replace” at retirement to meet your expected retirement expenses • Usually 70% to 85% of income just before retirement

  14. Where Will My Retirement Income Come From? PRCRSP Spouse Retirement PRPIP Other Social Security

  15. www.gbophb.org

  16. Benefits Access

  17. Other Other Retirement UMPIP Social security

  18. Benefits Access • Account balances • Contributions coming in • Investment information • Personal/Address information • Beneficiary designations

  19. Participant Services • LifeStage Investment Management Service option that selects funds and rebalances as needed • LifeStage Retirement Income option that turns an account balance into monthly payments designed to last a lifetime and keep up with inflation • Ernst & Young Financial Planning Services available for financial counseling on a variety of topics including debt management and retirement planning All the above services provided at no charge to the participant

  20. LifeStage Investment Management Service LifeStage Investment Management Service (LifeStage)—Managed Accounts

  21. LifeStage—DC Accounts Social Security eligibility Value of Social Security benefits Target Allocation Risk tolerance Age * Defined contribution (DC)

  22. LifeStage Retirement Income • Helps participants manage distributions

  23. Enrollment—Set Aside Money

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

  25. Ernst & Young Financial Planning Services

  26. Program Advantages • Confidential, expert advice at no charge • Unlimited hours of financial planning advicevia telephone • Financial planners (Ernst & Young, LLC) • Objective advice—no sales pitch • No need to enroll—just call 1-800-360-2539or go online to set up an appointment • Free website: http://gbophb.eyfinancialplanner.com(company code:gbophb; company program: gbophb)

  27. Consultation Topics • Creating a retirement plan • Choosing retirement plan investments • Buying a home • Developing an estate plan • Managing debt • Funding children’s education • Other

  28. PRCRSP Defined Benefit Example: DAC = $65,186 Clergyperson with 6 years of service in PRCRSP (01/01/07 – 12/31/2012) 1.25%x $65,186x 6 $4,888.95 • $4,888.95 • ÷ 12 $407.41

  29. Proposed Change • Freeze the DAC at 2014 level: • $65,186

  30. Rationale for Proposed Change • Increases in the DAC increases the contributions/liability for the PRMC • Assuming 3% increases in DAC the PRMC is underfunded by $1,391,134 • Freezing the DAC reduces the underfunded amount by an estimated 10% - 17%

  31. 1-800-851-2201 www.gbophb.org

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