Wespath FAQs: General Conference 2019

 

Wespath FAQs: General Conference 2019

Most Recent Update—May 14, 2019

Questions on this webpage have now been updated to reflect the results of General Conference 2019.

Wespath continues to give thoughtful consideration to the decisions of the Special Session of the General Conference and the impact on pensions, benefits and liabilities funding. As we receive additional questions in the upcoming weeks, we expect to provide additional updates to the FAQs in order to provide accurate and consistent information to the Church.

Please direct any questions to mrapaport@wespath.org.


The Special Session of the General Conference of The United Methodist Church (February 23-26, 2019; St. Louis, Missouri) acted on a report from the Commission on a Way Forward, which was authorized to examine paragraphs in The Book of Discipline concerning human sexuality and to explore options to strengthen church unity. [More details about General Conference 2019 are available on the UMC website: umc.org.]

The following FAQs provide information on two pension-related petitions that were submitted by the Commission on a Way Forward and approved by the General Conference, as well as additional information related to General Conference 2019 outcomes and potential impacts on clergy benefits.

Clergy Information

Retired Clergy

Local Churches

Lay Employees

General Information

Institutional Investors (including Annual Conferences)


What are the two pension-related petitions that were approved at General Conference 2019?

Petition 90016 (approved) requires that local churches changing the nature of their connection to The United Methodist Church shall pay a proportional fair share of the annual conference’s unfunded pension liability to the annual conference. This payment is designed to account for the investment, longevity and other risks that the local church is leaving with its conference.

Petition 90017(approved) applies to active clergy who leave the UMC by termination of their annual conference relationship. The vested accrued pension benefits of such clergy will be converted to an account balance. The conversion will use actuarial factors corresponding to those used when determining annual conference plan sponsor contributions to the Clergy Retirement Security Program (CRSP).

  • The converted pensions will be transferred to an individual account in the United Methodist Personal Investment Plan (UMPIP), a voluntary defined contribution plan maintained by Wespath.

Petition 90016 and Petition 90017 are effective as of the close of the 2019 General Conference, i.e., February 27, 2019.

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What happens to pension benefits after the General Conference 2019?

For most participants nothing will change.

  • If you are receiving pension or annuity payments from Wespath as a retiree, surviving spouse or other beneficiary, your benefits are not changing. Nothing that happened at the 2019 General Conference will change those benefits.
  • If you are an actively serving clergyperson and you remain fully connected to your United Methodist annual conference, your benefit coverage remains the same.
  • If you are an active clergyperson who leaves The United Methodist Church (meaning your conference relationship terminates or ends), then the retirement benefits you have earned up to the date you leave will be preserved, but converted to an individual account balance, as explained below.

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What would happen to accrued pension benefits for a clergyperson who leaves the UMC after General Conference 2019?

If an active clergyperson’s annual conference relationship is terminated under ¶360 of The Book of Discipline, all of that clergyperson’s accrued pension benefits under the Clergy Retirement Security Program (CRSP), including those under the Pre-82 portion of the plan, would be converted into an account balance (dollar amount) equivalent and transferred to the United Methodist Personal Investment Plan (UMPIP), a voluntary defined contribution plan maintained by Wespath.

Retirement Plan (U.S. Clergy) Years of UMC Service Impact of Leaving UMC Connection
Pre-82 Plan Prior to 1982 The clergyperson’s benefit is converted into an account balance equivalent and transferred to UMPIP.
  • The calculation takes into account both the “formula benefit” [Pre-82 credited service x past service rate (PSR)] and the defined benefit service money (DBSM), and ensures that the participant’s benefit reflects whichever of the two produces the greater value.
Ministerial Pension Plan (MPP) 1982 – 2006 MPP benefits are account balances that do not need to be converted. The account balances would be transferred to UMPIP.
CRSP defined benefit (CRSP DB) January 2007 – date of termination/ relationship change
  • Based on the date of the clergyperson’s departure, DB benefits will no longer accrue service credit.
  • CRSP DB benefits would be converted into an account balance and transferred to UMPIP.
CRSP defined contribution (CRSP DC) January 2007 – date of termination/ relationship change
  • CRSP DC account balances would be transferred to UMPIP.


All of the amounts transferred to UMPIP as described above would be invested in Wespath funds according to the direction of the terminated participant—similar to the participant’s personal contributions to UMPIP. These amounts could provide opportunities for growth that do not exist in pension benefits (depending on market conditions and fund returns), but no longer guarantee lifetime income through monthly annuity payments.

UMPIP benefits are portable, no matter where a clergyperson serves or if the pastor leaves ministry altogether.

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Does the new provision that requires conversion of pensions for departing clergy apply to clergy who lose membership in an annual conference under complaints or charges?

Yes. Whether clergy withdraw voluntarily under ¶360 or have their credentials revoked under the trial provisions in ¶2701-2719 of the Discipline, the new legislation that mandates the conversion of pension benefits to equivalent account balances will apply.

The legislation is intended to accomplish two things:

  1. Provide clergy who leave the UMC a more flexible and portable retirement benefit that may grow with market returns for their years served in the UMC, and
  2. Free annual conferences from pension-related risks (investment risk, longevity risk) attributable to clergy who leave the UMC—whether voluntarily or involuntarily.

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Does the new legislation regarding conversion of pensions (Petition 90017) apply to clergy who withdrew from the UMC prior to the close of General Conference 2019?

No. The new legislation does not apply to clergy who withdrew prior to the close of General Conference 2019. For those clergy, the plan rules in effect before General Conference 2019 will continue to apply.

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I’m hearing rumors like “Wespath will freeze my pension if I disobey The Book of Discipline.” Is that true?

No. Wespath is a service provider and fiduciary to all of its participants and beneficiaries. As such, Wespath follows the terms of the retirement plan documents and applicable federal and state law. Wespath is not the “behavior police” or enforcer of Church rules.

As explained throughout this FAQ, your pension and retirement benefits are secure.

  • If you remain fully connected to the UMC, your benefits do not change based on anything that happened at the 2019 General Conference.
  • If you leave the UMC, your earned pension benefits are preserved and converted to an account balance that is secure and portable through UMPIP.

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How does the pension conversion provision apply to surviving spouses?

Widows, widowers and other survivors currently receiving pension or annuity payments will continue to receive those payments. There is no change in their pension benefits as a result of General Conference 2019.

As a result of General Conference 2019’s enactment of the pension conversion provision, an active clergyperson who terminates his or her relationship with the UMC will have his or her benefit converted to an account balance equivalent. If the former UMC clergyperson then dies, the remaining account balance would pass on to the person’s heirs.

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For clergy who leave the UMC and are required to have their pensions converted to an equivalent account balance: how is the conversion calculated?

The conversion is calculated using the same actuarial assumptions, or “factors,” that are used when determining annual conference contributions to fund the pension benefits. These factors are sometimes referred to as “funding factors” and include considerations like expected mortality and long-term investment returns.

The use of funding factors to convert pensions to an equivalent account balance results in an account balance that approximates the value of contributions (with earnings) made by the annual conference to fund the pension of the clergyperson leaving the UMC.

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Why aren’t “market factors” used instead of “funding factors” when calculating the conversion?

Using “market factors” would result in an account balance that is higher than the amount contributed to fund the future benefits. This would give clergy who leave the UMC a financial advantage over those who stay. Using market factors would also lower the “funded ratio” of the retirement plan, which could harm both annual conferences and clergy who remain with the UMC.

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Can clergy who choose to exit the UMC keep their retirement account at Wespath—or would they be required to withdraw their account balance and invest elsewhere?

Clergy who terminate or change their relationship with their current annual conference or with the UMC connection may keep their retirement account at Wespath; they are not required to withdraw their account balance and invest elsewhere.

This is also true for clergy who have their pension benefits converted to an equivalent account balance, which is then transferred to UMPIP. For such clergy, any account balances transferred to UMPIP may remain invested with Wespath. Wespath serves many former UMC employees, surviving spouses and beneficiaries.

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If clergy exit the UMC and become eligible for a distribution from UMPIP, are there any disadvantages to rolling the balance over to an individual retirement account (IRA) or other retirement plan?

Potentially, yes. Rolling retirement assets out of a Wespath-administered plan to an IRA or other retirement plan could result in the loss of a clergyperson’s ability to benefit from the housing allowance exclusion from gross taxable income for distributions. Clergy may want to consult a tax advisor for more information.

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If clergy withdraw from their annual conference and do not join another denomination, do they lose the housing allowance exclusion from gross income?

It depends.

  • If a clergyperson chooses to no longer perform ministerial services (i.e., leave ministry altogether), any income earned in the future would not be eligible for a housing allowance exclusion. The housing allowance exclusion applies only to compensation earned or retirement benefits accrued while performing services as a “minister of the gospel” as defined by the IRS.
  • With respect to retirement benefits, leaving the UMC will not impact a clergyperson’s ability to apply the housing allowance exclusion to retirement income. However, a rollover of such benefits from Wespath to an IRA or a future employer’s retirement plan could jeopardize one’s ability to apply the housing allowance exclusion. Clergy who are interested in executing a rollover should consult with a tax advisor to assess the risk of losing the housing allowance exclusion.

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If a clergyperson exits the UMC, can he or she continue contributing to UMPIP?

Generally, clergy must remain active with an annual conference, local church or other UMC-associated organization that sponsors UMPIP in order to continue contributing. However, if a former UMC clergyperson serves a new employer, a former UMC local church or other organization that is sufficiently associated with the UMC (a “facts and circumstances” analysis based on IRS guidance), and the employer agrees to sponsor UMPIP, then personal contributions to UMPIP may continue.

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How are individual clergy pension benefits determined under the Clergy Retirement Security Program (CRSP)?

Each clergyperson has a unique combination of benefits based on one’s specific years of service and the plan designs in place at that time of service.

Learn more about UMC retirement plans here.

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Will monthly pension benefits being paid to a clergyperson be reduced in the event of a UMC restructure (for example, if many churches leave the UMC, resulting in annual conferences merging)? What about accrued benefits not yet in payment?

The chance that pension payments would be reduced is very remote.

Pension benefits already earned (accrued) to date through defined benefit (DB) retirement plans are “vested” and generally secure.

  • Clergy who depart from the UMC (i.e., terminate their UMC annual conference relationship) would have a change in the form of their benefit. Departing clergy would not forfeit benefits they have accrued; however, the DB accruals (i.e., the promise of future fixed payments for life in retirement) would be converted into an equivalent account balance (a dollar amount that belongs to the clergyperson and grows or shrinks based on market fluctuations) that is transferred into the United Methodist Personal Investment Plan (UMPIP).
  • Local churches that leave the UMC must pay a fair share payment (also called “withdrawal liability”) to the annual conference in order to help ensure that pensions being paid can be preserved.

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Does any legislation passed at General Conference 2019 impact pensions of currently retired clergy?

No. Retirement benefits for already retired clergy are secure. The pension-related provisions that passed at General Conference 2019 seek to maintain that security.

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Did the pension-related petitions that passed at General Conference 2019 apply to clergy in the Central Conferences?

No. Clergy in the Central Conferences receive retirement benefits through the pension plans of those conferences. Those plans do not have connectional liabilities.

These FAQs apply to U.S. clergy, local churches and annual conferences.

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What about other clergy benefits?

Most of Wespath’s focus leading up to General Conference 2019 has been on clergy pension benefits because of the long-term liabilities among U.S. annual conferences and the shared responsibility for payments.

However, potential restructure of the UMC (including but not limited to potential exit of clergy or local churches) could also impact other clergy benefits administered through Wespath, as explained below.

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If a clergyperson is currently receiving disability benefits from the Comprehensive Protection Plan (CPP), will leaving the UMC cause those disability benefits to stop? What if the clergyperson’s local church leaves the UMC?

Replacement income that is already being paid from CPP due to disability will continue—even if the clergyperson leaves the UMC or his/her local church exits.

  • Once those benefits begin, they will continue for as long as the recipient remains disabled (as defined in CPP). (Please note: Any retirement plan contributions made by CPP during disability would cease when a clergyperson leaves the UMC. Also, there are other events that may cause disability replacement income to end, such as failing to verify continued disability, reaching a certain age, etc.; these events are related to CPP plan rules and are not specific to leaving the UMC.)

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If an active clergyperson leaves the UMC, will he or she remain eligible for death benefits from CPP?

No. An active clergyperson who leaves the UMC does not remain eligible for CPP death benefits. (However, if a clergyperson had already retired and qualified for retiree death benefits before leaving the UMC, the clergyperson would remain eligible for CPP retiree death benefits.)

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If an active clergyperson’s local church leaves the UMC, will he or she remain eligible for death benefits from CPP?

Yes, the clergyperson remains eligible for CPP death benefits if he or she remains with the UMC and continues to meet the eligibility requirements of CPP. But, if the clergyperson leaves the UMC with his or her local church, then he or she would not remain eligible for death benefits from CPP.

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If a retired clergyperson is convicted of Book of Discipline violations with regard to the BOD rules regarding human sexuality or other provisions—does the clergyperson lose earned pension benefits?

No. Generally, a clergyperson (whether active or retired) cannot lose earned pension benefits through a church trial or other termination. Earned pension benefits are vested under the terms of the retirement plans and cannot be taken away.

However, the clergyperson may forgo certain pension benefit increases, such as past service rate (PSR) increases under the Pre-1982 plan or cost-of-living benefit increases. Additionally, the retired clergyperson might have other benefits in retirement that could be affected by termination (for example: retiree medical coverage, which is subject to the rules and policies of the annual conference).

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If an already retired clergyperson surrenders his or her UMC credentials (after retirement) or otherwise terminates their conference relationship, would the clergyperson lose earned pension benefits?

No. Generally, an already retired clergyperson who surrenders credential voluntarily after retirement or terminates their conference relationship does not lose earned pension benefits. Earned pension benefits are vested under the terms of the retirement plans and cannot be taken away.

However, the clergyperson may forgo certain pension benefit increases, such as past service rate (PSR) increases under the Pre-1982 plan or cost-of-living benefit increases. Additionally, the retired clergyperson might have other benefits in retirement that could be affected by termination (for example: retiree medical coverage, which is subject to the rules and policies of the annual conference).

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I’m hearing rumors that Wespath will freeze my church’s assets if the local church doesn’t follow the Discipline. Is that true?

No. Wespath is a service provider and fiduciary to all of its participants, beneficiaries, and plan sponsors. As such, Wespath follows the terms of the retirement plan documents and applicable federal and state law. Wespath is not the “behavior police” or enforcer of Church rules. Wespath would not freeze any assets unless required by law, i.e., if ordered to do so by a court of competent jurisdiction.

  • As explained throughout this FAQ, participants’ pension and retirement benefits are secure.
  • As explained below, payments owed by local churches to cover long-term pension liabilities are made to the annual conference—not to Wespath.
  • For a local church that chooses to exit the UMC: the annual conference would calculate the amount owed for pension and other obligations.

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Why would an exiting local church be expected to pay monies to the annual conference to cover unfunded pension obligations?

The connectional nature of The United Methodist Church means that departure by one local church affects the whole Connection. An exiting church would leave some portion of its long-term pension obligations to the annual conference from which it is departing. This means that the exiting church in effect would leave behind its share of market and longevity risks related to retirees and survivors receiving benefits to the other local churches in its former annual conference and, to some extent, to other annual conferences and their local churches.

By paying its “fair share” of the annual conference’s aggregate unfunded pension liability as part of its exit, the exiting local church provides to the conference funding to compensate for taking on more of the responsibility involved in the promise of long-term pension payments for active and retired clergy and their surviving beneficiaries. This “fair share” payment also compensates the local church’s former annual conference for assuming what would have been that church’s risks (investment, longevity and mortality risks) for long-term clergy benefits now that the church will no longer be part of the annual conference.

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Who calculates an exiting church’s share of unfunded pension obligation that must be paid to its annual conference?

The annual conference would determine the amount that an exiting church owes for its share of unfunded pension liabilities. Similarly, the annual conference currently determines the amount each UMC local church pays to fund pension liabilities. As the general agency that administers clergy benefits and manages benefits-related funds, Wespath can provide actuarial guidance to help conferences make appropriate calculations.

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What role would Wespath have in determining pro rata unfunded pension obligations?

Wespath would calculate the total unfunded liability for pensions and annuities being paid and for benefits earned as of that date for the entire annual conference. This total unfunded liability would be calculated using market factors, similar to those used by a commercial annuity provider. But the conference would then decide how to allocate a proportional share of that liability to a local church.

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If a local church exits the UMC, how would that church’s pro rata share of unfunded pension obligations be calculated?

The individual church’s share of unfunded pension obligations would be determined by its annual conference. Conferences have flexibility in how they might calculate this. Some potential options that conferences might use to calculate individual church obligations include:

  • The local church’s apportionment decimal
  • The local church’s income as a percent of income from all churches in that conference
  • The pastor’s compensation as a percent of total compensation for all pastors in the conference
  • Other methodologies as determined by the annual conference, such as local church membership or attendance, or church giving, among others

Wespath will partner with annual conferences to determine the conference’s aggregate unfunded pension liabilities. Wespath is available to help annual conferences in developing their formulas.

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Does Wespath have any suggestions on how annual conferences might calculate an exiting church’s “share” of possible future pension funding?

Wespath suggests the following two-step approach for calculating an exiting church’s “fair share”:

  1. The conference may obtain from Wespath information about the additional dollar amount needed to fully fund all of the conference’s retirement plan components using actuarial assumptions similar to what a commercial insurer would use (i.e., actuarial assumptions based on a “market basis”), including funding for: Pre-82 Plan, Ministerial Pension Plan (MPP) and Clergy Retirement Security Program (CRSP).
  2. The conference then determines the departing church’s pro rata share of this amount based on that church’s financial capacity as compared to other churches in the conference. This might be based on apportionment decimal or other methods described above.

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Is the exiting church’s “pro rata fair share” payment based on any specific retirement plan?

No. The local church’s pro rata fair share (also called “withdrawal liability”) will be based on total liability for all defined benefit (DB) retirement plans [Pre-82 Plan, annuities from the Ministerial Pension Plan (MPP), and the DB portion of Clergy Retirement Security Program (CRSP)].

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What is the difference between “market factor” and “funding factor”—and how does that affect an exiting church’s “pro rata fair share” payment (also called “withdrawal liability”) to cover unfunded pension liabilities?

  • Pension plan liabilities on a long-term funding basis are calculated using a discount rate* that reflects the long-term, average expected earnings of the plan assets. All annual conferences currently make contributions on a funding basis for MPP annuities and CRSP DB.
  • Pension plan liabilities on a market basis are calculated at a discount rate that reflects what an insurer or other outside party would use in pricing the liabilities if taking over the responsibility for benefit payments from the plan sponsor (the conference, in this case).

Depending on current interest rates, market liabilities are typically higher than funding liabilities. This is because market-based discount rates are generally lower, reflecting more conservative assumptions about future earnings of plan assets.

Using market-based rates helps minimize the financial risk that is transferred to the party taking over the long-term responsibility for benefit payments. Sometimes the difference between market basis and funding basis liability amounts are quite substantial.

*The discount rate is an interest rate used to calculate the present value (i.e., money needed to pay all benefit liabilities today) of expected future benefit payments (i.e., the plan liabilities). Generally speaking, the lower the discount rate, the greater the liabilities.

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If a local church has dutifully paid 100% of its apportionments and pension payments over the years, why would it still be expected to pay an additional “fair share” if it leaves the annual conference or denomination?

Even though the local church has paid as expected for many years, the church still leaves behind a long-term financial risk when it exits. This is because an exiting church leaves behind what would have been its share of long-term liabilities (i.e., monies the church would have paid in future benefits to retired clergy). The annual conference and the remaining local churches in that conference therefore assume the long-term financial risk for benefit payments. Long-term financial risk is affected by factors such as investment conditions and longevity (i.e., how long participants and surviving spouses/beneficiaries are estimated to receive promised payments).

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If a local church exits from a conference whose plans are currently “fully funded,” would the church be excused from paying an additional “fair share” withdrawal liability?

If the conference’s plans are fully funded on a market basis (which would be a very rare circumstance), there would be no withdrawal liability. Otherwise, the exiting local church should still pay its share to the annual conference of the total needed to be fully funded on a market basis. Even if the conference plans are fully funded on a long-term basis at the time the local church exits, there is no guarantee that they will remain fully funded over the next 10 to 50 years or beyond because of fluctuations in investment markets, mortality, etc. over the long term.

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Where would exit payments be held?

Legislation passed by General Conference 2019 requires that a local church’s exit payment (“withdrawal liability”) be paid to its former annual conference. The Conference Board of Pensions or other decision-making body in the annual conference would determine the ultimate use of these assets, but would be encouraged to use them for pension and benefits purposes.

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If a local church left the UMC any time before General Conference 2019 (including in prior years), would they have had to pay their “fair share” to cover unfunded pension liabilities?

It depends. Because the UMC is “connectional,” a departure by one local church affects others. So a local church that left The United Methodist Church connection before General Conference 2019 might have been expected to pay its fair share of unfunded pension liability to the annual conference from which it departed.

Annual conferences may have sought these contributions in the past. Petition 90016, which passed at General Conference 2019, amended language in The Book of Discipline to require such contributions.

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If a local church exits The United Methodist Church, would it face costs other than pension liabilities?

Yes, the annual conference may determine that there are additional financial considerations for a local church that leaves the UMC. Other financial considerations might include:

  • Retiree medical liabilities
  • Non-benefit financial obligations to the annual conference
  • Repayment of grants or loans
  • Apportionment costs
  • Other expenses, as determined by the annual conference or general church

The legislation that passed at General Conference 2019 (Petition 90016) requires payment only with respect to the local church’s share of unfunded pension liabilities. However, the General Conference amended Petition 90016 to clarify that this does not prohibit annual conferences from collecting additional monies from departing local churches, including those listed above.

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What is the “trust clause” and why does it matter?

The “trust clause” is a paragraph in The Book of Discipline (¶2501) that applies to all properties of United Methodist local churches, agencies and institutions. Under the trust clause, all such property is held in trust for the benefit of the entire denomination, with ownership and usage being subject to the Discipline. Property can be released from the trust only to the extent authority is given by the Discipline. If a local church seeks to exit the UMC, the trust clause applies to any property held by the church, even if the title is in the name of such church.

General Conference 2019 added a new subparagraph to The Book of Discipline ¶1504. The new language requires local churches that choose to leave the UMC to pay an exit payment to cover their share of unfunded pension obligations. Payment would be made to the annual conference.

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Did the 2019 General Conference approve a “gracious exit” for local churches?

Yes. The 2019 General Conference approved Petition 90066, as amended, which allows a local church to disaffiliate from the UMC under certain circumstances. Petition 90066 requires a period of discernment by the local church, but then allows the local church to disaffiliate from the UMC by a 2/3 vote of the church conference, provided that the local church pays its fair share of the annual conference’s pension obligations and certain other financial obligations, and the annual conference board of trustees approves.

However, during the General Conference, the Judicial Council advised that Petition 90066 was unconstitutional, in part. The Council of Bishops has asked the Judicial Council to review Petition 90066, as amended by the General Conference, and determine its constitutionality in when the Judicial Council meets in April (April 23-26, 2019).

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Does any of the legislation passed at General Conference 2019 impact retirement benefits for lay employees?

No. Pension-related legislation that passed at General Conference 2019 does not impact retirement benefits of lay employees. Retirement benefits for lay employees are generally provided through defined contribution (DC) plans, which provide individual accounts funded with immediate contributions. These accounts are portable and fully funded once contributions are made, so they do not involve long-term funding obligations. In addition, the retirement plans for lay are generally not connectional in nature, so the local church, annual conference, general agency or other UM employer do not carry shared responsibility for funding the plan.

Lay employees are typically covered through DC plans such as the United Methodist Personal Investment Plan (UMPIP), the Retirement Plan for General Agencies (RPGA) or the Horizon 401(k) Plan. More details about retirement plans are available at Wespath.org.

A small number of former general agency employees who are now retired may be receiving pension or annuity payments from legacy defined benefit plans. Those legacy plans are well-funded.

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Can Wespath serve churches or clergypersons who choose to leave the UMC?

Yes. Wespath is authorized by The Book of Discipline and U.S. law to manage funds and offer services to church and nonprofit organizations that are related to, or share “common religious bonds and convictions” with, The United Methodist Church. Thus, Wespath can continue to serve such organizations as long as they continue to share such common religious bonds and convictions with the UMC.

Clergypersons can continue to participate in Wespath-administered plans if they serve such organizations, and if those organizations choose to become plan sponsors of Wespath-administered plans.

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How is Wespath preparing for the future?

  • Wespath has a “scenario planning” team analyzing the potential impacts of General Conference 2019 to the UMC.
  • Wespath remains focused on assuring that the plans we manage and funds we invest remain sustainable for future generations. We are evaluating plan design changes to present to General Conference 2020 that we believe will help make our plans more sustainable over the long term.
  • Wespath is prepared to make necessary adjustments to continue serving the UMC far into the future
  • Wespath is well-positioned to continue fulfilling our mission of caring for those who serve the Church.

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Are the amendments being considered for retirement plan designs for the 2020 General Conference a result of potential changes to the Church, potential membership attrition or other disruptions that might follow General Conference 2019?

No. Wespath believes that a changing society (globally and in the U.S.), along with potential disruptive changes to the structure and governance of the Church—including shifting demographics and declining size of the U.S. Church—necessitate a substantial change to the U.S. clergy retirement plan in the foreseeable future in order to reflect a more sustainable design. We believe a transition from a traditional pension to an account balance type plan would be more sustainable over the long term.

This belief is based not only on Wespath’s analysis and scenario planning, but also in part on feedback received from many stakeholder groups within the Church, as part of a recent Wespath plan design study. Any disruptive changes to the Church that follow the 2019 General Conference will accelerate the need for the transition.

Please note: Changes to the U.S. clergy retirement plan requires General Conference 2020 approval, and would impact future service as of the plan’s effective date (potentially January 1, 2023—to be determined by the General Conference 2020). Benefits for service prior to the new plan’s effective date would not be affected.

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Does Wespath still intend to propose a DC-only retirement plan to General Conference 2020?

Yes. Wespath believes that a defined contribution (DC) plan design or similar account balance type plan will be more sustainable over the long term, due to future church departures, shifting demographics, the declining size of the U.S. Church and other factors.

A defined contribution/account balance type plan would help:

  • Protect conferences from decades-long pension obligations;
  • Allow portability for individuals who move between churches, conferences and other employers; and
  • Support greater freedom and flexibility for the denomination.
  • Please note: Changes to the U.S. clergy retirement plan require General Conference 2020 approval, and would impact future service as of the plan’s effective date (potentially January 1, 2023—to be determined by the General Conference 2020). Benefits for service prior to the new plan’s effective date would not be affected.

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Does General Conference 2019 affect Wespath’s ability to serve institutional investors?

No. Wespath is authorized to manage funds and offer services to nonprofit organizations that are related to the UMC. That has not changed.

  • Wespath can continue to serve organizations that share such “common religious bonds and convictions” with the UMC.
  • Wespath Institutional Investments remains committed to enabling clients to meet their investment objectives by offering access to world-class investment managers, a globally-recognized sustainable investment program and global market diversification.
  • Wespath is well-positioned for the future. We are focused on assuring that the funds we manage on behalf of our institutional clients remain sustainable for the future.

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Will General Conference 2019 outcomes impact investment decisions of Wespath Institutional Investments?

No. Wespath’s investment process is not affected by the outcome of GC2019.

  • Wespath has always, and will continue to, operate as a prudent fiduciary on behalf of our participants and institutional investors.
  • Our 10 Investment Beliefs, which guide Wespath’s investment approach, remain in place. Our most important belief—our Investor Focus—states that our activities must support the financial well-being of those we serve. They also speak to our aspiration to provide financial stability and security to those we serve, both now and in the future.

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Would any retirement or other benefit related claims or the liabilities associated with the Church’s pension and benefit plans cause risk to the accounts that institutional investors maintain with Wespath?

No. The assets Wespath manages for its institutional clients (directly or through its subsidiary Wespath Institutional Investments) are held in trust separate from the benefit plan assets that Wespath manages. The trust protects the institutional investor assets from claims by Wespath’s creditors, as well as the claimants of the UMC benefit plans.

Similarly, the assets dedicated to the UMC benefit plans are held in separate state law trusts. The trusts protect the plans’ assets from claims by Wespath’s creditors, as well as the creditors of other benefits plans.

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Is there any foreseeable scenario under which Wespath would freeze the assets of an institutional investor purely as a result of a schism and/or church departure?

Wespath is a service provider to its institutional investors under the legal terms of investment management contracts. Wespath would not freeze the assets of an institutional investor unless required by law, i.e., if ordered to do so by a court of competent jurisdiction. Although Wespath does not believe that such a ruling or order would be likely, it cannot rule out the possibility of such a ruling or order being issued.

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Submit a Question

Do you have an additional question for Wespath Benefits and Investments on how outcomes of General Conference 2019 impact clergy benefits, as well as related effects on local churches, annual conferences or institutional investors? Please submit your question to Wespath.

 

 
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