10/4/2013 Susquehanna Annual Conference October 9,10, & 16 2013 Presented by: Mark A. Conner Benefits Education Specialist ● Not-for-profit organization ● Approximately $19 billion in assets under management ● 91,000 participants ● Largest denominational pension fun d 2 ● Retirement provisions ● Comprehensive Protection Plan ● General Board retirement plans ● Services: ― LifeStage Investment Management Service ― LifeStage Retirement Income ― Ernst & Young Financial Planning 3 1
10/4/2013 ● Normal retirement ― Age 65 or 40 years of service ● Early retirement ― Age 62 or 30 years of service ● Mandatory retirement ― Age 72 4 Average plan compensation of United Methodist clergy serving full-time appointments ● 2015: $66,259 ● 2014: $65,186 ● 2013: $63,867 5 Taxable cash salary $25,000 + §125/§403(b)reduction $ 5,000 + Housing exclusion $ 2,000 + Parsonage: (25%) $ 8,000 = Total $40,000 6 2
10/4/2013 Death and Disability 7 ● 70% of plan compensation ● Reduced by Social Security disability benefit ● Must submit application and be approved ● Periodic re-approval 8 ● Death and disability benefits ― Active ― Retiree ● Educational benefits for surviving children ● Eligibility requirements ― Full-time: Compensation > 60% DAC/CAC* ― Others by conference elective arrangements * CAC: Conference Average Compensation 9 3
10/4/2013 Active $50,000 Spouse 20% of DAC ($12,773) Surviving spouse 15% of DAC ($ 9,580) Child 10% of DAC ($ 6,387) 10 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 of 10 ― 2014: 7 of 10, etc. ― 2019: 12 of 15 11 Retired participant $20,000 Spouse $15,000 Surviving spouse $10,000 Child $8,000 12 4
10/4/2013 Applies to: ● ― CRSP DC ― MPP not yet annuitized ― UMPIP ― CPP Purpose—to designate in advance of death, ● who will receive the benefits ― Spouse: Usually primary, if married ― Children and other heirs: Contingent ― Charity or a trust: Contingent Plan defaults: Surviving spouse or estate, if single ● 13 ● 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 MPP account as well 14 CRSP 2014+ CRSP UMPIP 2007-2013 CRSP 1982-2006 Ministerial Pension Plan (MPP) Pre-82 Plan (Ministerial Reserve Pension Fund) CRSP: Clergy Retirement Security Program UMPIP: United Methodist Pension Plan 15 5
10/4/2013 Defined Benefit Defined Contribution (DB) (DC) 16 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 17 CRSP De fi ned Bene fi t 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 18 6
10/4/2013 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 19 Actuarial reduction for early retirement: ½% for each month or fraction of a month retirement begins in advance of normal retirement Example: Age 62 with less than 37 years of service • Three years from normal retirement • ½% per month for three years = 18% reduction 20 ● Benefit automatically increases by 2% each year after retirement ● Surviving spouses may receive a benefit, if elected ● Alternative survivor option and cost-of-living increases available ― 70%, 85% and 100% to surviving spouse ― 3%,4% and 5% COLA 21 7
10/4/2013 ● Until 2014, contribution equal to 3% annually based 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 directed by the participant ● Available as a cash distribution—lump sum, partial lump sum or retirement income (also known as cash installments) ● LifeStage Retirement Income Service for managing distributions ● Remaining balance to beneficiary at death 22 CRSP 2014+ CRSP UMPIP 2007-2013 CRSP 1982-2006 Ministerial Pension Plan (MPP) Pre-82 Plan (Ministerial Reserve Pension Fund) CRSP: Clergy Retirement Security Program UMPIP: United Methodist Pension Plan 23 ● Application for Benefits May leave on account until age 70½ ● “Annuitize” exactly 65% of account ● Lifetime annuity options ● ― 70%, 85%,100% to contingent annuitant ― 0%, 2%-5% annual cost-of-living increases 24 8
10/4/2013 Effective after December 31, 2013, MPP annuity based on 65% of MPP balance with options for remainder: ● Roll over to UMPIP or other retirement plan ● Take as a monthly cash distribution, using LifeStage Retirement Income ● Leave on account until age 70½ or retirement (whichever is later) ● Take as a lump sum 25 ● A stream of payments ● Life annuity—benefit paid for life (if joint, two lives) 26 ● Participant’s age at time of set-up ● Spouse or contingent annuitant’s age ● Account balance ● Type of annuity selected ● Percent of annual increase selected (0%, 2-5%) ● Mortality table (life expectancy) ● Annuity conversion interest factor 27 9
10/4/2013 Sample: Payable to Annuity Type Payable to You Contingent Annuitant Life with 100% $1,120 $1,120 Life with 85% $1,223 $1,039 Life with 70% $1,325 $927 28 Sample: Annuity Type Payable to You Life with 10-year certain $1,457 Life with 5-year certain $1,495 Life only $1,506 29 $4,800 $4,200 5% $3,600 4% 3% $3,000 2% 0% $2,400 $1,800 $1,200 $600 $0 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 30 10
10/4/2013 CRSP 2014+ CRSP UMPIP 2007-2013 CRSP 1982-2006 Ministerial Pension Plan (MPP) Pre-82 Plan (Ministerial Reserve Pension Fund) CRSP: Clergy Retirement Security Program UMPIP: United Methodist Pension Plan 31 Pre-82 Defined Benefit Formula Service Money Benefit (DBSM ) 32 ● Life payment ● Benefit is the greater of: ― Pre-82 years of service x past service rate (PSR) ― DBSM account balance converted to annuity Example: • 10 years x 576 = $5,760/year ($480 /month) • $150,000 converts to $11,250/year • Benefit = $11,250/year ($938/month) 33 11
10/4/2013 Example: Past Service Rate Benefit vs. DBSM Benefit 18,000 15,000 Annual Benefit $ 1,125 PSR 12,000 9,000 6,000 $576 PSR 3,000 0 Year PSR Benefit DBSM Benefit 34 Single Participant Married Participants • Single-life, no refund Life with 75% to surviving spouse (spouse at time of • Benefit ceases upon retirement) participant’s death 35 CRSP 2014+ CRSP UMPIP 2007-2013 CRSP 1982-2006 Ministerial Pension Plan (MPP) Pre-82 Plan (Ministerial Reserve Pension Fund) CRSP: Clergy Retirement Security Program UMPIP: United Methodist Pension Plan 36 12
10/4/2013 ● Before-tax contributions ● After-tax contributions ● Rollovers ― 401(a) ― 401(k) ― 403(b) ― IRA (traditional) 37 Before ‐ Tax and After ‐ Tax Contributions Agreement Percentage or dollar amount Can increase or decrease throughout the year 38 402(g): $17,500 Catch-up (age 50+): $5,500 415(c) lesser of includable compensation or $51,000 * * See IRS Publication 571 regarding 15-year rule 39 13
10/4/2013 Before-Tax • No federal income tax (currently) • No SECA (Social Security ) After-Tax • Pay federal income tax • Pay SECA (Social Security) 40 ● Benefit choices ― Full lump sum ― Partial lump sum ― Cash installments ― Leave on account ● During retirement, you can elect to use LifeStage Retirement Income to manage your monthly distributions ● May pass remainder to heirs 41 ● Hardship loans ― Up to 50% of vested account balance, not to exceed before-tax, after-tax and rollover account balances ― Not to exceed $50,000 ● Hardship withdrawals ― From after-tax and rollover accounts and before-tax contributions ― Six-month suspension from contributing 42 14
10/4/2013 Pre-1982 MPP Lifetime (must annuitize income 65% of account balance) CRSP/DB (35%) CRSP/DC CRSP/DC** Until accounts are depleted UMPIP UMPIP** Age 59½ 62 65 70½* * Pension plan distributions must start later of retirement or age 70½ ** Required Minimum Distribution (RMD) from UMPIP and CRSP DC 43 Amount to be excluded is the least of: ● Amount designated as housing allowance (in active service, by clergy compensation agreement; in retirement by an annual conference resolution) ● Amount actually spent for housing ● Fair rental value of housing 44 Appendix, page viii Are You on Track To Retire 45 15
Recommend
More recommend
