caring for those who serve u.m. benefits review (with general conference changes) missouri annual...

Caring For Those Who Serve

U.M. Benefits ReviewU.M. Benefits Review

(with General Conference (with General Conference

changes)changes)

Missouri Annual ConferenceMissouri Annual Conference

AugustAugust 9, 20139, 2013

Presented by:Presented by:

Mark ConnerMark Conner

AgendaAgenda

• Retirement provisions (unchanged)Retirement provisions (unchanged)

• CPP (death & disability) eff. 2013CPP (death & disability) eff. 2013

• General Board retirement plans eff. 2014General Board retirement plans eff. 2014

• Services:Services:• LifeStage Investment ServiceLifeStage Investment Service• LifeStage Retirement Income Service (new)LifeStage Retirement Income Service (new)• Ernst & Young Financial Planning ServiceErnst & Young Financial Planning Service

Provisions for RetirementProvisions for RetirementThe Book of Discipline ¶358The Book of Discipline ¶358

• Normal retirementNormal retirement Age 65 or 40 years of serviceAge 65 or 40 years of service

• Early retirementEarly retirement Age 62 or 30 years of serviceAge 62 or 30 years of service

• Mandatory retirementMandatory retirement Age 72Age 72

Comprehensive Protection Comprehensive Protection PlanPlan

Death and Death and DisabilityDisability

Comprehensive Protection Comprehensive Protection PlanPlan

• Death and disability benefitsDeath and disability benefits ActiveActive RetireeRetiree

• Educational benefits for surviving childrenEducational benefits for surviving children

• Eligibility requirementsEligibility requirements Full-time: Compensation Full-time: Compensation Others by conference elective arrangementsOthers by conference elective arrangements

Denominational Average Denominational Average Compensation (DAC)Compensation (DAC)

• Average plan compensation of Average plan compensation of United Methodist clergy serving United Methodist clergy serving

full-time appointmentsfull-time appointments 2013: $63,8672013: $63,867 2014: $65,1862014: $65,186 2015: $66,2592015: $66,259

Plan CompensationPlan Compensation

$40,000$40,000= Total= Total

$ 8,000$ 8,000+ Parsonage: (25%)+ Parsonage: (25%)

+ Housing allowance + Housing allowance OROR

$ 5,000$ 5,000+ 125/403(b) + 125/403(b) reduction:reduction:

$27,000$27,000 Taxable cash Taxable cash salary:salary:

Long-Term Disability Plan Long-Term Disability Plan BenefitsBenefits

DefinitionDefinition•Unable to perform duties due to injury Unable to perform duties due to injury or illness for at least 6 continuous monthsor illness for at least 6 continuous months

Disability AmountDisability Amount70% of pre-disability plan compensation70% of pre-disability plan compensation (housing + cash salary) (housing + cash salary)Plan compensation not to exceed 200% of the DACPlan compensation not to exceed 200% of the DAC

Minimum benefit amount equal to 40% of the Minimum benefit amount equal to 40% of the DACDAC

Disability Benefit Disability Benefit ChangesChanges

• Return-to-work incentivesReturn-to-work incentives• Mental-nervous benefit limitationMental-nervous benefit limitation• Benefit duration schedule after age Benefit duration schedule after age

6262

Post Incapacity Earnings – G C Post Incapacity Earnings – G C changeschanges

Monthly benefit can go below 40% DACdue to other income offset

ProvisionProvision CPP Current BenefitCPP Current Benefit 2013 Change2013 Change

Before 24 months of Before 24 months of disabilitydisability

• Offset applied after Offset applied after claimant “earns” claimant “earns” 100% of pre-disability 100% of pre-disability compensationcompensation

• No changeNo change

After 24 months of disability

• $1 for $1 offset applied $1 for $1 offset applied immediatelyimmediately

• $.50 for $1 offset $.50 for $1 offset applied immediately,applied immediately,up to 100% of pre-up to 100% of pre-disability compensationdisability compensation

Return-to-Work, GC changesReturn-to-Work, GC changes

CPP Current ProcessCPP Current Process 2013 Change2013 Change

Voluntary; for claimants Voluntary; for claimants on disability less than on disability less than 24 months24 months

• For claimants (with doctor’s release) For claimants (with doctor’s release) before and after before and after 24 months24 months

• Participant disincentive Participant disincentive (benefit reduction for refusal)(benefit reduction for refusal)

• Conference incentive (grant) Conference incentive (grant)

New Benefit Duration ScheduleNew Benefit Duration Schedule

Benefit duration scheduleBenefit duration schedule** aligned with Social Security aligned with Social Security Normal Retirement Age Normal Retirement Age

* Cases of mental nervous limitation: lesser of maximum duration or 24 months* Cases of mental nervous limitation: lesser of maximum duration or 24 months

Age at Disability Benefit Duration*

Less than age 62 To Social Security retirement age

Age 62 60 months

Age 63 48 months

Age 64 42 months

Age 65 36 months

Age 66 30 months

Age 67 24 months

Age 68 18 months

Age 69 and above 12 months or age 72, whichever is earlier

CPP Death Benefits 2013 CPP Death Benefits 2013 (Active)(Active)

Active: $50,000

Spouse: 20% of DAC ($12,773)

Surviving spouse: 15% of DAC ($ 9,580)

Child: 10% of DAC ($ 6,387)

CPP EligibilityCPP Eligibility

Retiree death benefit eligibility Retiree death benefit eligibility rulesrules

• Effective January 1, 2013Effective January 1, 2013 25 years of service or,25 years of service or,

At least 12 of 15 years At least 12 of 15 years immediately prior, phasing in immediately prior, phasing in

2013, 6 0f 102013, 6 0f 10

2014, 7 of 10, etc.2014, 7 of 10, etc.

2019,12 of 152019,12 of 15

CPP Retiree Death Benefits CPP Retiree Death Benefits 20132013

Retired Participant: $20,000

Spouse: $15,000

Surviving spouse: $10,000

Child: $ 8,000

Beneficiary DesignationBeneficiary Designation

• Beneficiary designations are required for Beneficiary designations are required for retirement and welfare plans, and supersede retirement and welfare plans, and supersede willwill provisions provisions

• Update at times of changeUpdate at times of change Birth or adoption of a child, marriage, divorce or Birth or adoption of a child, marriage, divorce or

deathdeath

• Can make separate designations for CRSP Can make separate designations for CRSP **,,UMPIP and CPPUMPIP and CPP

* CRSP covers the MPP account (before set-up) * CRSP covers the MPP account (before set-up) as wellas well

General Board Retirement General Board Retirement PlansPlans

Clergy Retirement Security Program (CRSP)

2007-2013 2007-2013 CRSPCRSP

1982-20061982-2006Ministerial Ministerial

Pension Pension Plan (MPP)Plan (MPP)

Pre-82 PlanPre-82 Plan(Ministerial (Ministerial

Reserve Reserve Pension Fund)Pension Fund)

United Methodist Personal Investment Plan (UMPIP)

2014+CRSP

Clergy Retirement Security Clergy Retirement Security ProgramProgram

+Defined Defined BenefitBenefit

(DB)(DB)

Defined Defined ContributionContribution

(DC)(DC)

Part-Time Service Part-Time Service for the DB Componentfor the DB Component

• CRSP not available to 25% appt’s 1-1-2014CRSP not available to 25% appt’s 1-1-2014

Missouri (New 2014) recommendation for Missouri (New 2014) recommendation for local church contribution to UMPIPlocal church contribution to UMPIP

• Credited service based on Credited service based on appointment percentage appointment percentage (75% or 50%) and . . .(75% or 50%) and . . .

• Adjusted if only a portion Adjusted if only a portion of a full year servedof a full year served

CRSP Credited Service CRSP Credited Service Example for the DB ComponentExample for the DB Component

CRSP credited service example:CRSP credited service example:

01/01/07 – 06/30/08 First UMC 100% 1.5

07/01/08 - 09/30/08 Wesley 100% .25

10/01/08 - 06/30/09 Pastoral 0% 0.00Counselor

07/01/09 - 06/30/10 Highland 50% .50

07/01/10 - 12/31/10 Christ 50% .25

Total CRSP-DB creditTotal CRSP-DB credit2.502.50

Period Church Appt. % Credit

CRSP Defined Benefit CRSP Defined Benefit Component― Service Before Component― Service Before 20142014Monthly payment, 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

until December 31, 2013

Example for 2020 retirement.0125 x $80,000 (hypothetical DAC) x 7 years = $7500 ÷ 12 = $625 per month

Monthly payment, payable for life, calculated by multiplying the following and then dividing by 12:

• 1.0%• DAC at time of retirement• Years of credited service after January 1, 2014

Example for 2020 retirement.01 x $80,000 (hypothetical DAC) x 7.5 years = $6,000 ÷ 12 = $ 500 per month

CRSP Defined Benefit Component― CRSP Defined Benefit Component― After 2013After 2013

2020 retirement

Total benefit= 625 + 500 = $1,125 per month

Initial dollar amount of the benefit will be reduced to offset the value of spousal coverage. (credit > 2014)

Choice of cost-of-living increase

Reduction for early retirement

CRSP Defined Benefit ComponentCRSP Defined Benefit ComponentExample: 2007 to 2020Example: 2007 to 2020

CRSP Formula BenefitCRSP Formula Benefit

Actuarial reduction for early retirement:Actuarial reduction for early retirement:½ % for each month or fraction of a month retirement ½ % for each month or fraction of a month retirement begins in advance of begins in advance of normal retirement normal retirement

Age 63 ½ with less than 38 years of Age 63 ½ with less than 38 years of serviceservice

• One and ½ years from full retirement• ½ % per month for 18 months = 9 %

reduction

Example:Example:

CRSP Defined BenefitCRSP Defined Benefit

• Benefit automatically increases Benefit automatically increases by 2% each year after retirement by 2% each year after retirement

• Alternative survivor option and Alternative survivor option and cost-of-living increases available at cost-of-living increases available at retirementretirement

• Surviving spouse benefit equalSurviving spouse benefit equalto 70% of deceased participant’s to 70% of deceased participant’s credited years benefit for 2007-13credited years benefit for 2007-13

• For credited years starting 2014, For credited years starting 2014, retiring participant can elect retiring participant can elect surviving spouse benefit optionsurviving spouse benefit option

Defined Contribution Defined Contribution ComponentComponent

• Contribution equal to 3% annuallyContribution equal to 3% annuallybased on plan compensationbased on plan compensation

• Matching starting January 1, 2014 Matching starting January 1, 2014 (2% contribution plus 1% match (2% contribution plus 1% match if participant contributes at least 1% to UMPIP)if participant contributes at least 1% to UMPIP)

• Account balance invested as directedAccount balance invested as directedby the participantby the participant

• Available as a cash distribution Available as a cash distribution (partial, full or cash installments)(partial, full or cash installments)

• Remaining balance to beneficiary at deathRemaining balance to beneficiary at death

CRSP: DC ComponentCRSP: DC Component

2% 2% Non-matchNon-match

2% 2% Non-matchNon-match

1%1% Match Match**

1%1% Match Match**

CRSP DC3% Non-match

CRSP DC3% Non-match

Effective January 1, Effective January 1, 20142014

* 100% of UMPIP contributions up to 1% of compensation* 100% of UMPIP contributions up to 1% of compensation

Effective thru December 31, 2013Effective thru December 31, 2013

Matching ContributionsMatching Contributions

Participant Participant Before-Tax/Before-Tax/After-Tax After-Tax

ContributionsContributions

2%2%Non-Non-

MatchMatch

1%1%MatchMatch

CRSP DCCRSP DC UMPIPUMPIP

UMPIP SourcesUMPIP Sources

• Before-tax contributionsBefore-tax contributions

• After-tax contributionsAfter-tax contributions

• RolloversRollovers 401(a)401(a) 401(k)401(k) 403(b)403(b) IRA (traditional)IRA (traditional)

Updating Your Updating Your Monthly ContributionMonthly Contribution

• Before-Tax and Before-Tax and After-Tax After-Tax Contributions Contributions AgreementAgreement

• Percentage or Percentage or dollar amountdollar amount

• Can increase or Can increase or decrease throughout decrease throughout

the yearthe year

2013 Elective Contribution 2013 Elective Contribution Limits Limits

402(g): 402(g): $17,500$17,500Catch-up (age 50+):Catch-up (age 50+):$5,500$5,500

415(c) lesser of includable 415(c) lesser of includable compensation or $51,000compensation or $51,000**

* See * See IRS Publication 571 IRS Publication 571 regarding 15-year regarding 15-year rulerule

Before-Tax or After-Tax Before-Tax or After-Tax ContributionsContributions

Before-TaxBefore-Tax

• No federal income tax (currently)No federal income tax (currently)• No SECA (Social Security)No SECA (Social Security)

After-TaxAfter-Tax

• Pay federal income taxPay federal income tax• Pay SECA (Social Security)Pay SECA (Social Security)

UMPIP AccessUMPIP Access

• In-service withdrawalsIn-service withdrawals Age 59½Age 59½

• Hardship loansHardship loans• Hardship withdrawalsHardship withdrawals• DisabilityDisability• TerminationTermination• RetirementRetirement

United Methodist Personal United Methodist Personal Investment Plan Investment Plan DistributionsDistributions

• Benefit choicesBenefit choices Full lump sumFull lump sum Partial lump sumPartial lump sum Cash installmentsCash installments Leave on accountLeave on account

• Must begin to take distributions later of:Must begin to take distributions later of:

• Retirement (age 72 on/before July1)Retirement (age 72 on/before July1)

• April 1 following attainment of age April 1 following attainment of age 70½

• Sign up for LifeStage Retirement IncomeSign up for LifeStage Retirement Income

• Use “Benefits Access”Use “Benefits Access”

LifeStage Retirement IncomeLifeStage Retirement Income

• Converts defined contribution account Converts defined contribution account balances into monthly incomebalances into monthly income

• Adjusts payments annually for inflationAdjusts payments annually for inflation• Keeps payments within the Keeps payments within the

“payment safety zone”“payment safety zone”• Offers excellent probability of lifetime Offers excellent probability of lifetime

income, income, but no guaranteebut no guarantee

Advantages of LifeStage Advantages of LifeStage Retirement IncomeRetirement Income

• Alternative for non-annuitized MPP Alternative for non-annuitized MPP balancebalance Annuitization limited to 65% of Annuitization limited to 65% of

MPP account after December 31, 2013MPP account after December 31, 2013

• Counters retirement tendency Counters retirement tendency to overspend or underspendto overspend or underspend

• Balance is left to beneficiariesBalance is left to beneficiaries

• Participants may opt out at any timeParticipants may opt out at any time

• Investments managed by LifeStageInvestments managed by LifeStage

LifeStage Retirement LifeStage Retirement Income Income Annual ProcessAnnual Process

• Annual adjustment calculated each Annual adjustment calculated each November November && reflected in January payment reflected in January payment

• Participant receives letter detailing Participant receives letter detailing change in paymentchange in payment

• Payments are generally expectedPayments are generally expectedto increase—but a decrease is possibleto increase—but a decrease is possible

Payment Safety Zone

$758 / month

LifeStage Retirement IncomeLifeStage Retirement Income

Enrollment—Consolidate Enrollment—Consolidate

Enrollment—Set Aside MoneyEnrollment—Set Aside Money

Benefits Access Benefits Access EnhancementsEnhancements

LifeStage “Do It Yourself” installment payment LifeStage “Do It Yourself” installment payment tool tool

General Board Retirement General Board Retirement PlansPlans

Clergy Retirement Security Program (CRSP)

2007+ 2007+ CRSPCRSP

1982-20061982-2006Ministerial Ministerial

Pension Plan Pension Plan (MPP(MPP))

Pre-82 PlanPre-82 Plan(Ministerial (Ministerial

Reserve Pension Reserve Pension Fund)Fund)

United Methodist Personal Investment Plan (UMPIP)

New Lifetime MPP Options: New Lifetime MPP Options: Effective 1-1-2014 ***Effective 1-1-2014 ***

• Exactly 35% of balance must be:Exactly 35% of balance must be: Rolled over to UMPIP or other retirement planRolled over to UMPIP or other retirement plan Taken as a cash distributionTaken as a cash distribution Left on account until age 70½ or retirement Left on account until age 70½ or retirement

(whichever is later)(whichever is later) Once rolled over to UMPIP, LifeStage Once rolled over to UMPIP, LifeStage

Retirement Income Service is availableRetirement Income Service is available

****** Choices made Choices made ATAT retirement (or delayed til retirement (or delayed til 70 ½ with required beginning date70 ½ with required beginning date

MPP Distribution Options: MPP Distribution Options: Life with Survivor Life with Survivor AnnuitiesAnnuities

Life with 100%Life with 100% $1,120$1,120 $1,120$1,120

Life with 85%Life with 85% $1,223$1,223 $1,039$1,039

Life with 70%Life with 70% $1,325$1,325 $ 927$ 927

Life with 50% N/ALife with 50% N/AN/AN/A

SampleSamples:s: Payable Payable toto

ContingentContingentAnnuity TypeAnnuity Type Payable to YouPayable to You AnnuitantAnnuitant

MPP Distribution MPP Distribution Options: Options: Life AnnuitiesLife Annuities

Annuity TypeAnnuity Type Payable to Payable to YouYouLife with 10-year certainLife with 10-year certain $1,699$1,699

Life with 5-year certainLife with 5-year certain $1,746$1,746

Life onlyLife only $1,760$1,760

Samples:Samples:

Benefits Benefits Access Access • www.benefitsaccess.orgwww.benefitsaccess.org

• Find current account informationFind current account information

• ToolsTools ReadinessReadiness Retirement projectionRetirement projection

• Investment informationInvestment information

• Beneficiary designationsBeneficiary designations

• Resources on finances and retirementResources on finances and retirement

Social security

CRSP DB

MPP

UMPIPCRSP DCPre’82

Social security

CRSP DB

MPP

UMPIPCRSP DCPre’82

Ernst & Young Financial Ernst & Young Financial

Planning Services Planning Services

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