ELCA Board of Pensions annuity, bridge fund benefits reduced for 3 years

by John R. Brooks, ELCA News Service

The Board of Pensions of the Evangelical Lutheran Church in America
(ELCA) sent letters to 12,500 plan members in its Participating Annuity
and Bridge Fund, notifying them of reductions in their monthly annuity
payments and the interest-crediting rate for non-annuitized funds. The
actions were taken Sept. 21 by trustees of the Board, which manages
health and pension plans for ELCA professional leaders, other staff and
their eligible spouses.

The downturn in investment markets in late 2008 and early 2009 resulted
in a gap between the net assets in the Fund and projected lifetime
obligations to members, John G. Kapanke, Board president, said in a
report to the ELCA Conference of Bishops, which met Oct. 1-6 in Chicago.
Effective Jan. 1, 2010, monthly annuity payments will be decreased by 9
percent, he said. Kapanke said the Board anticipates monthly annuity
payments will be decreased "by an additional 9 percent in 2011 and
2012." The interest-crediting rate for the non-annuitized portion in
the "bridge component" of the Fund will be cut 3.5 percent for each of
three years beginning in 2010, Kapanke said.

"The annuity and bridge fund did suffer very significant losses, like
many similar plans suffered, especially in the 4th quarter of 2008 and
the first two months of 2009," Kapanke said. The result was a funding
deficit of 26 percent as of Aug. 31, he said. To ease the effect on plan
members, the Board decided to implement the reductions over a three-year
period instead of all at once, Kapanke said. To answer questions about
the reductions, Kapanke told the bishops, he hosted a series of
conference calls for plan members.