ELCA Pension Plan to Offer More Choice

MINNEAPOLIS (ELCA) -- At its Nov. 3-5 meeting here, ELCA Board of Pensions trustees adopted a new pension strategy that will offer more choice and flexibility for plan members. The strategy, approved by the ELCA Church Council at its Nov. 10-13 meeting, will be implemented in 2003.
At its previous meeting the board of trustees set the strategy in motion by removing the required annuitization for members retiring at age 70-1/2, retroactive to Aug. 1, 2000.
The new strategy will consolidate regular and optional pension plans into one investment program, though they will retain their separate account status and withdrawal features. In addition, the strategy will offer more investment choices, add more flexible retirement options and include an education program to help members understand their choices and become more financially literate. The first phase of the education program will begin in 2001.
As part of this move, the Board of Pensions must seek an outside record-keeping partner that will allow for daily valuation, Internet account access and an advanced voice response system, said John G. Kapanke, president.
"This is consistent with our vision to focus on the relationship side of our service to plan members and congregations. We recognize outside companies are more efficient and better equipped to perform record-keeping functions in today's fast-paced marketplace," Kapanke said. "Our strengths are in our advocacy role as the ELCA's lifetime provider of pension, health and other benefits and related services."
Trustee Jon B. Christianson, Arden Hills, Minn., asked why the plan couldn't be implemented sooner than 2003.
A conversion for the typical company would likely take six to nine months, but the ELCA program is not the typical corporate plan, said Robert J. Procaccini, vice president for information systems.
The ELCA program serves a complex mix of multiple congregations, agencies, and rostered and lay staff members who have various predecessor church plan histories, he said. The extra time is needed to prepare the Board of Pensions' systems properly for the conversion to a new outside record-keeper, Procaccini said.
Trustees rescinded a move made at their August 2000 meeting to add two new U.S.-only investment funds to the regular pension plan in 2001 so that board resources can be used to develop the pension changes further (including the U.S.-only funds) in 2003.
"We will communicate details of our upcoming pension changes as they develop and well in advance of any required action by plan members," Kapanke said.
The board also adopted a 2001 budget of $50.6 million, which is in line with 1999 reported projections and up from $43 million in 2000. The increase is necessary because of medical management fees, pension record-keeping changes and other investments in relationship technology, said Michael L. Troutman, vice president for finance and investments. This also includes an increase in investment management fees resulting from rapid growth in ELCA pension fund assets.
In approving the 2001 budget, the board of trustees also expressed support for the budget projections for 2002 ($54.2 million) and 2003 ($57 million). The 2001 and 2002 budgets include funding for the proposed employment of a full-time staff person in the ELCA Division for Ministry to direct a health and wellness project, Kapanke said.
Staff updated trustees on health plan changes under consideration for 2002, which include possible expansion of managed care and greater member choice between Aetna U.S. Healthcare and Blue Cross and Blue Shield of Minnesota. Trustees are expected to vote on a final recommendation at their meeting Feb. 3-4.
Carol A. Mashuga, pension benefits manager, explained a return-to-work pilot project for plan members on disability. "The Board is trying to manage, not just administer, disability cases," Mashuga said, adding that the board plans to offer return-to-work support for those who may benefit from such assistance. The plan involves psychiatric and functional skills assessment as well as vocational assessment. The board will work with synod bishops and the ELCA Division for Ministry to assist plan members who want to return to active pastoral roles, Mashuga said.
[*Sonia C. Solomonson is managing editor of The Lutheran magazine.]