Sec ectio ion I I: Health I th Insuranc ance 2020 Sec ectio ion I II: Pen ension & & Ret etiremen ement R Rev eview ew Sec ectio ion I III: Gen ener eral C l Confer eren ence & ce & Futur ure P e Pen ensio ions
Healthflex Exchange
Healthflex Exchange 6 Health Plans 3 Dental 3 Vision
Healthflex Exchange GOLD 3 SILVER 2 BRONZE 1 Premium Low $ High $$ Benefits Low $ High $$
Healthflex Exchange GOLD 3 SILVER 2 BRONZE 1 Deductible High Low Out-of-Pocket Max High Low
Healthflex Exchange GOLD 3 SILVER 2 BRONZE 1 Out-of-Pocket Cost High Low
Defined Contribution FREE money to the pastor
Does t Does the d e defi fined ed con ontrib ribut ution ion eq equal ual the he prem emium ium of of the e plan? an?
NO Annual c l confer erenc ence a e adopted pted a define ined c d contribu tribution ion independe ependent o nt of any p premiu mium.
Defined Contribution Per Month Per Year Pastor $832.25 $9,987 Church $741.67 $8,900 Conference $90.58 $1087
= Defined Contribution $9,987/YEAR or $832.25/MONTH Individual Clergy Only Defined Contribution +$832.25 H1500: No Upgrade H1500 Plan -$838 Dental HMO -$ 14 Basic Vision (Exam Only) $ 0 Pastor’s Monthly Contribution $ 19.75
= Defined Contribution $9,987/YEAR or $832.25/MONTH Individual Clergy Only Defined Contribution +$832.25 C2000 Plan -$861 Dental Passive PPO 2000 -$ 35 Basic Vision (Exam Only) $ 0 Pastor’s Monthly Contribution $ 63.75
Annual Election Oct. 31-Nov. 14, 2019
Dental PASSIVE PPO *g *goi oing a away i y in 2020 2020
NEW PLANS Dental DENTAL HMO : Lowest Premium DENTAL PPO : Second Highest Premium (Default Plan) DENTAL PPO 2000: Highest Premium
Why it’s helpful: Addendum -Timing of premiums (occasionally after charge conference) -Always a great reminder (sometimes we forget what we pick) -Helpful for payroll
What hat is is im impor orta tant nt wh when ch choosing a a plan? lan?
- Premi mium - Free contribution to HR HRA/HSA - Rx. . Be Benefit – dif differen ent for or each each - Per ersonal onal saving avings - Out Out-of-po pock cket m t max.
Why do y do pr premi miums keep go p going u g up? p?
The he Mar arket et & & Grou oup C Claim laims Perfor ormance ance
Group Claims Performance -2018 Data -Good News of 2019
RETIREMENT
Pensions Words We Use Retirement Savings
Words We Use CRSP: Clergy Retirement & Security Program DB: Defined Benefit DC: Defined Contribution PIP: Personal Investment Plan
Tech chnically i indi dicates an an empl ployer-funde ded pl d plan an, bu but generally g gets appl applied t d to o retirement be benefits.
A retirement pl plan an i in which the be benefit pai paid d to o retirees i is de defined d an and d funde ded by d by the e empl ployer.
Defined Benefit
The Problem Defined Benefit The employer pays for benefits, the limits of which are not clear. How? By contributing on behalf of all active employees.
A ret etirement p nt plan i n in n whi hich h the he emplo loyer r makes a a set c contribu ribution ion to active e employees ees’ r retirem emen ent accou ccounts, w wit ith n no o pr prom omise of of any bene enefit a t and nd actual r ret etirement. t.
Defined Contribution
Money ney inv nveste ested b by an n in indiv dividual for a or and d restricted d unt ntil r reti etirement. t. Employee ees c can ha n have e money w mon wit ithheld f d from om t their ir pa paych checks. Different I t IRS ta tax x tr treatments th that t can be be dif differed u d until il wit ithdrawal.
Before R e Ret etiremen ement Retirement Savings
During R Ret etiremen ement Retirement Savings
Clergy Retirement & Security Program Defined Contribution: 3% of clergy compensation contributed by church to account
Clergy Retirement & Security Program 2007-2012: 1.25% DAC x Years of service 2013 - PRESENT: 1% DAC x Years of service paid to retirees monthly
How i ow is s th the cle clergy ret etir iremen ement a t and nd s sec ecuri rity pr prog ogram f fun unded?
Churches ches c contr tribu ibute te 9.22% 22% o of c compens pensatio tion n (housi using + g + salary)
Clergy Retirement & Security Program With DC benefits, higher paid clergy receive more contribution and savings, but the DB equalizes retirement benefits.
Clergy Retirement & Security Program The Risk The DB portions spreads the risk of loss in the market between clergy participants and annual conferences.
Clergy Retirement & Security Program 9.22%
Clergy Retirement & Security Program What if the stock market crashes?
Clergy Retirement & Security Program What if retirees start to live 5-10 years longer?
Clergy Retirement & Security Program Risk is shared with the conference which sponsors the plan.
If th the con conference h has to s to ma make a e a contr ntrib ibuti ution, wher here e will it ill it come? me?
Loc ocal al Chur hurch ches
Legacy Plans 1982–2007: Ministerial Pension Plan Before 1982
MPP Acted like a DC plan At retirement 65% of the account balance is annuitized—converted to defined benefit
The Risk = x Annual Benefit Past service rate Years of service
The Risk The conference shares risk in three plans. Churches share that risk.
Clergy Retirement & Security Program What happens if the conference splits?
Clergy Retirement & Security Program What if we loose 50% of churches?
Clergy Retirement & Security Program What if church attendance continues to decline?
Whe here i is s the the ri risk r sk reall ally? y?
Onl nly the one the one hold holding the ben the benefit c t can lose an lose the ben the benefit
General Conference & Future Pensions
Ho How C w Can an we we provi vide quali uality y retir tirement an t and mitig itigate ate th the ri risk sks s to o conf onfer eren ences a ces and nd chu hurches ches?
- DC plans C plans ONL ONLY - Defer S.S. un until 67 - Chu hurch ches es contr contribute te to to DC
Social Security & Medicare Full SS benefit at 67 (not 65) Meant to replace approx. 35% of income - CRSP DC – 9% - CRSP DB – 20%
Social Security & Medicare - It is not 100% of income at retirement - If you start SS early it’s less - Saving is critical!
The Problem Clergy typically retire at 65 ensuring low SS income
The Problem What if the pastor lives a long life and uses all their DC and PIP benefits?
The New Plan FIRST: Using Lifestage Retirement Income, Wespath already tries to ensure the CRSP-DC and PIP money will last
The New Plan Every Pastor New Pastors Established Pastors $140 From church 2% + 2% match Up to 4% match From church From church 3% compensation From church
The New Plan FIRST: The new plan will allow a person to defer SS for two years (until age 67), by receiving higher payouts
The New Plan The new plan will allow the purchase of deferred annuities that start at age 85 Insures against “running out”
The New Plan The new plan requires more individual responsibility and personal savings
More fle flexi xibi bili lity in in denom ominat ational al uncer ertain inty
Shifting o of f futu uture cost sts s away from le less ss sta stable entities ( (co conferences an and ch d churches)
Mone ney in in plan is lan is par artici cipan ant’s and and c can an be le left ft t to he o heir irs
Ris isk k of of mar arket t los loss shift fted to individua ual
Inherently less “connec ectio ional al”
Persona sonal l Respons onsibilit ibility
Sec ection I I: : Health I Insur surance 2020 Sec ection I II: : Pen ension & & Ret etir ireme ment R Rev eview iew Secti tion I n III: General ral C Conference ce & Futur ure P Pensi sions
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