Presented by:
Ron Coleman
Those Reaching
Middle Age of their
Ministry
Mississippi Conference
August 16, 2010
Caring For Those Who Serve
On the Road to Retirement
• When should you retire?
• When do you want to receive your
retirement benefits?
• How much will you need?
• Which benefit options should you choose
2
On the Road to Retirement
• What are the retirement income
sources?
• How to increase your pension?
• Where to get financial planning?
• Find out if you’re on track
3
Overview
• Retirement Provisions
• Retirement Plans
• LifeStage Investment Management Service
(LifeStage)
• Comprehensive Protection Plan (CPP)
• Ernst & Young Financial Planning Services
• Pension Projections
4
Denominational Average
Compensation (DAC)
• Average plan compensation of
United Methodist clergy serving
full-time appointments
• 2010: $60,341
• 2011: $61,716
5
Conference Average
Compensation (CAC)
• Average annual compensation
of United Methodist clergy serving
full-time appointments related to
a specific conference
• 2010 = $59,379
• 2011 = $60,158
6
Provisions for Retirement
The Book of Discipline ¶358
Normal Retirement
Mandatory retirement
• Age 65 or 40 years
of service
• Age 72—effective
January 1, 2009
Early Retirement
• Age 62 or 30 years
of service—effective
January 1, 2009
20-Year Retirement
7
Retirement Plans
Clergy Retirement Security
Program (CRSP)
Pre-82 Plan
1982-2006
2007+
(Ministerial
Reserve Pension
Fund)
Ministerial
Pension Plan
(MPP)
CRSP
United Methodist Personal
Investment Plan (UMPIP)
8
Pre-1982 Benefit
• Service before January 1, 1982
• Pension credit—Yes or No
• Annual conference is obligated
to fund a pension for those years
• Benefit = Life Annuity
9
Pre–82: Benefit Paid for Life
Single participant
• Single-life, no refund
• Benefit ceases upon
participant’s death
Married participants
• Life with 75 % to
surviving spouse
(spouse at time of
retirement)
10
Retirement Plans
Clergy Retirement Security
Program (CRSP)
Pre-82 Plan
1982-2006
2007+
(Ministerial
Reserve Pension
Fund)
Ministerial
Pension Plan
(MPP)
CRSP
United Methodist Personal
Investment Plan (UMPIP)
11
Ministerial Pension Plan: 1982–2006
• Benefit based on account balance
and participant’s annuity selection
• Account balance invested until
benefits begin
• MPP account balance (including
accumulated earnings) remains
separate until distributed in retirement
12
Annuity
• A stream of payments
• Period certain (term)
annuity = benefit paid
over a guaranteed period
• Life annuity = benefit
paid for life (if joint = two lives)
13
Retirement Distributions:
MPP (Post-1981)
• Application for benefits
• May leave on account until age 70½
• One-time distribution of up to 35 %
of account
• “Annuitize” at least 65 % of account
• 7 Annuity options
■
0, 50, 70,75,100% survivor
■
0, 2-5 % annual increases
14
Retirement Plans
Clergy Retirement Security
Program (CRSP)
Pre-82 Plan
(Ministerial
Reserve Pension
Fund)
1982-2006
Ministerial
Pension Plan
(MPP)
2007+
CRSP
United Methodist Personal
Investment Plan (UMPIP)
15
Clergy Retirement
Security Program (CRSP)
A new retirement
plan, effective
January 1, 2007
providing a core
benefit at retirement
with two components
16
Clergy Retirement Security Program
+
Defined
Benefit
(DB)
Defined
Contribution
(DC)
17
Defined Benefit Component
Monthly payments, payable for life,
calculated by multiplying the following
and then dividing by 12:
• 1.25%
• DAC at time of retirement
• Years of credited service from January 1, 2007
Example for 2013 retirement
.0125 x $65,000 (hypothetical DAC) x 6.5 years
= $5,281 ÷ 12 = $440 per month
18
Defined Contribution Component
• Plan sponsor contribution of 3% of
clergyperson’s plan compensation
• Account balance invested as
directed by participant
• Available as cash distribution at
retirement (or termination)
■
■
■
Full lump sum
Partial lump sum
Cash installment (e.g., monthly)
19
Retirement Plans
Clergy Retirement Security
Program (CRSP)
Pre-82 Plan
(Ministerial
Reserve Pension
Fund)
1982-2006
Ministerial
Pension Plan
(MPP)
2007+
CRSP
United Methodist Personal
Investment Plan (UMPIP)
20
UMPIP Sources
• Before-tax contributions
• After-tax contributions
• Rollovers
■
401(a)
■
401(k)
■
403(b)
■
IRA
21
UMPIP Access
• In-service withdrawals
■
Age 59½
• Hardship loans
• Hardship withdrawals
• Disability
• Termination
• Retirement
22
UMPIP
• Benefit choices
■
■
■
■
Full lump sum
Partial lump sum once per quarter
Cash Installments
Leave on account
• Flexibility to make changes
• May pass on to heirs
23
Advantages of Investing
Through the General Board
• Socially responsible investing
• Competitive returns
• Low expense ratios
• Access to LifeStage Investment
Management Service
• Uphold the values of The United
Methodist Church
24
Investment Options
IEF
USEF
Risk
BSVPF
MAF
FIF
•
•
•
•
Stable Value Fund
Inflation Protection Fund
Fixed Income Fund
Multiple Asset Fund
•
Balanced Social Value
Plus Fund
• U.S. Equity Fund
• International Equity Fund
IPF
SVF
Return Potential
25
UMPIP Unitized Funds
Expense Ratio Comparison
3.00
2.50
2.00
238
Short-Term
Bond Funds
119
Inflation
Protection
Funds
753
1,151
Funds with
Short,
Balanced
Intermediate,
Objective
And Long-Term
Bond Funds
1,773
Multi-Asset
Class Funds
413
1,417
Growth and Foreign Stock
Funds
Income
Funds
1.50
1.00
0.70
0.50
0.49
0.37
0.49
0.87
0.80
0.42
0.00
SVF
IPF
FIF
BSVP
MAF
USEF
IEF
Source: Wilshire Compass and Lipper as of 03/31/09
26
General Board Competitive Returns
Year-to-date July 23, 2010
1.8%
SVF
2.6%
IPF
5.9%
FIF
2.0%
MAF
1.4%
1.4%
-1.6%
BSVPF
USEF
IEF
27
LifeStage Investment Management
Service (LifeStage)
LifeStage Investment Management Service
(LifeStage)—managed accounts
28
LifeStage
Benefits:
• Creates a customized investment
portfolio for you
• Reviews asset allocation annually
• Rebalances your account as needed
• Allows you to focus on other things
29
LifeStage: Fund Selection Feature
Risk Tolerance
Target Fund Allocation
Age
GBOPHB
Account
Balances
Age at
Retirement
Social Security
Eligibility
Value of Social
Security Benefits
▪
▪
▪
▪
▪
Fixed Income Fund
Inflation Protection Fund
U. S. Equity Fund
International Equity Fund
Stable Value Fund
30
LifeStage: Rebalancing Feature
Before Actual Fund Allocations
After Actual Fund Allocations
14%
13%
13%
13%
29%
26%
27%
17%
▪ Fixed Income Fund
▪ Inflation Protection Fund
▪ U. S. Equity Fund
▪ International Equity Fund
▪ Stable Value Fund
14%
34%
▪ Fixed Income Fund
▪ Inflation Protection Fund
▪ U. S. Equity Fund
▪ International Equity Fund
▪ Stable Value Fund
No participant intervention required
31
LifeStage
Optional
MPP
Required
x
CRSP 3%
x
UMPIP—personal contributions
x
32
Comprehensive Protection Plan
Death and Disability
33
CPP Retirement Eligibility
January 1, 2009
• Eligible to receive a benefit from CRSP
■
■
Two consecutive years preceding retirement
At least five of the 10 years immediately
preceding retirement or 25 years
34
CPP Death Benefits 2010
Active:
$50,000
Retired:
30% of DAC ($18,102)
Spouse:
20% of DAC ($12,068)
Surviving spouse: 15% of DAC ($ 9,051)
Child:
10% of DAC ($ 6,034)
35
Ernst & Young Financial
Planning Services
Financial Planning
1-800-360-2539
36
Consultation Topics
• Creating a retirement plan
• Choosing retirement plan investments
• Buying a home
• Developing an estate plan
• Managing debt
• Funding children’s education
• Evaluating insurance needs and options
37
www.gbophb.org
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39
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1-800-851-2201
www.gbophb.org
41
Hebrews 11:7
“ By faith Noah, being warned by God
concerning events as yet unseen,
took heed and constructed an ark
for the saving of his household….”
42