TAMPA, Fla. (UMNS) – United Methodist clergy in the United States will continue to participate in a retirement program that includes a monthly pension payment.
By a vote May 3 of 819 to 78, the 2012 General Conference delegates approved a modified Clergy Retirement Security Program. The plan combines a defined benefit component with a defined contribution component, like the clergy’s current retirement program, but with a reduced benefit for clergy and, consequently, a lower contribution for U.S. conferences. It is only mandatory for full-time clergy.
A defined benefit plan provides a monthly pension payment for life, with the employer (in this case, annual conferences) assuming the investment risk. A defined contribution plan – like the 401(k) plans most corporate employees now have – provides an account balance to use during retirement, with the clergyperson assuming the risk that the money may run out in his or her lifetime.
The legislative body rejected a motion to mandate the program apply to half-time and three-quarters-time clergy. The Financial Administration Legislative Committee had amended the program to give conferences final authority in determining whether clergy who serve half-time or three-quarters time can participate in the program.
General Conference delegates also voted down a minority report that recommended a clergy retirement program that would have relied on defined-contribution only.
The board of directors of the United Methodist General Board of Pension and Health Benefits had recommended General Conference accept the modified Clergy Retirement Security Program rather than going with the defined-contribution plan only.
The change reduces the costs to conferences overall by about 15 percent compared to the current plan, pension board staff members said.
It does not reduce benefits that already are being paid to retired clergy or reduce what active clergy have already earned.
The future impact on active clergy depends on a variety of factors, including years of service, level of compensation at retirement and the long-term performance of the stock market.