Thursday, May 3, 2012

Clergy Pensions

For many years, retiring clergy have been blessed by a generous pension. Even though the pension plan has been adjusted over the last 30 years, the pension that clergy receive is a combination of defined benefit and defined contribution. The General Conference was asked to decide between a modified plan with a reduced defined benefit (something like what now exists where clergy receive a predictable monthly income and the risk of loss is on the UMC, the plan sponsor), and a plan with a defined contribution (where individual clergy hold the full risk of market ups and downs for pension dollars contributed on their behalf and receive at retirement the earnings of their pension investment). 

Both plans reduce the amount of pension that future retiring clergy will receive. The main decision is where the risk of investment should be placed, with the church or with the clergy.

Note: In the Detroit Annual Conference, the pensions of our retirees are fully funded far into the future thanks to wise investments in the past. It would be to the benefit of our Conference and clergy to keep some form of the defined benefit model. 

The General Confernece decided to keep a modified form of the defined contribution pension benefit. However, it will be up to each annual conference to decide whether clergy serving less than full-time will be covered. 

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