Going forward as an Annual Conference, we are going to need to discern a balance between a variety of issues, which influence a decision on how we will administer and underwrite a Medicare supplement subsidy. That balance also includes resultant consequences of whatever decision is made.
The questions and consequences to be considered are multi-faceted, complex, and often competing elements. Below are a number of those considerations, which you are invited to pray over for God’s guidance and discernment.
These are likely not exhaustive, so you may perceive additional aspects of the decision before us, as well as potential results from implementation of a particular plan.
What are some of the unwritten covenants, both real and perceived, both formal and informal, which inform our decision? For example, “We will care for our clergy who serve us” and “Sisters and brothers who follow us tomorrow are affected by our decision today”.
What do we mean by these covenants? For example, “We will care for our clergy who serve us” is usually interpreted to mean our care will exist during both active and retired years.
But what will that care look like? If pensions are healthier today than they were for previous generations, are we caring for current clergy adequately to compensate for any loss of benefits that may be incurred? Specifically, how much larger must a pension benefit be in order that newly retired clergy are compensated for the loss of a welfare supplement subsidy.
If we base a subsidy on need, how will we define “need”? For example, those with at least five years of pre ’82 service years? Those who have served below the Denominational Average Compensation (DAC) for at least 15 years? Those who averaged below the DAC for the course of their service years, with a minimum of thirty years of service?
Note: when considering compensation with respect to the DAC, we must also keep in mind that clergy earning below the DAC from 1982 through 2006 already received an additional amount in their MPP account that gave them an annual pension equivalent to a clergy earning right at the DAC.
Furthermore, all clergy with pre ’82 service years earn exactly the same defined benefit for each of those service years. In other words, everyone with pre ‘82 service years are already treated equally, though modestly in comparison to post ’82 plans. Finally, those with CRSP service years (2007 to present) are also treated equally with the bulk of the pension plan that is a defined benefit. The inequality that exists with CRSP is the 2-3% that is a defined contribution.
Is the “need”, as we define by answering the above question, logical, justifiable, and genuine? That is, if clergy salaries have increased at far greater than the cost of living during the past few decades (as has been demonstrated elsewhere in this publication, and which not only affects earning power, but also MPP (church’s portion), UMPIP (personal portion), and CRSP (Defined Contribution pension deposits), how much more must salaries grow, if any, to adequately offset a loss of the Medicare supplement subsidy? In short, are new retirees with thirty or more years of service genuinely “in need”?
Are we caring for new retirees effectively and graciously enough during their active service years (and in comparison to previous generations of retirees) that a Medicare supplement subsidy is no longer necessary for us to feel like we must continue to provide that subsidy to adequately care for them? Or, do we as a conference feel like there is still a genuine need to provide that subsidy?
With what balance of subsidy benefit to stewardship cost are we willing to live?
With what balance of subsidy benefit to stewardship cost are we willing to obligate the conference in five years? Ten years? Fifteen years? (Note: it is wise for us to remember that with each class of retirees we choose to provide a subsidy, that subsidy does not just cost the conference for the next fiscal year, but for the lifetime of all clergy and spouses in that retiring class. This is not intended as a blunt or crass statement, but a reminder of the true reality of cost.)
What is a fair and adequate period of time to provide future retirees to plan, should we decide to substantially curb or eliminate the subsidy? (Note: Keep in mind that prudent pastors began such planning when the 2012 Annual Conference first created the Sustainability Team…or even when the 2009 Annual Conference voted to cut the budget for the subsidy from $3.5 million to $1.5 million.)
What further information may be necessary or helpful as we, the Indiana Conference, make these decisions?
Decisions concerning the Medicare supplement subsidy are neither easy nor straightforward. Nevertheless, it is a discussion we must have, as difficult as it is. The underlying factors identified here and elsewhere in this circular will not disappear. These factors will continue to force us to address very real and sobering issues facing us as a conference. Furthermore, the longer we choose not to make the difficult decisions before us, the more critical, and potentially catastrophic, the fiscal implications become for the conference.