caring for those who serve u.m. benefits review (with general conference changes) missouri annual...
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![Page 1: Caring For Those Who Serve U.M. Benefits Review (with General Conference changes) Missouri Annual Conference August 9, 2013 August 9, 2013 Presented by:](https://reader036.vdocument.in/reader036/viewer/2022062716/56649ddf5503460f94ad93f1/html5/thumbnails/1.jpg)
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
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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
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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
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Comprehensive Protection Comprehensive Protection PlanPlan
Death and Death and DisabilityDisability
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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
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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
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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:
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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
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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
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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
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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)
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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
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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)
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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
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CPP Retiree Death Benefits CPP Retiree Death Benefits 20132013
Retired Participant: $20,000
Spouse: $15,000
Surviving spouse: $10,000
Child: $ 8,000
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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
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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
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Clergy Retirement Security Clergy Retirement Security ProgramProgram
+Defined Defined BenefitBenefit
(DB)(DB)
Defined Defined ContributionContribution
(DC)(DC)
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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
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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
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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
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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
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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
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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:
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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
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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
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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
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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
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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)
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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
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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
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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)
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UMPIP AccessUMPIP Access
• In-service withdrawalsIn-service withdrawals Age 59½Age 59½
• Hardship loansHardship loans• Hardship withdrawalsHardship withdrawals• DisabilityDisability• TerminationTermination• RetirementRetirement
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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”
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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
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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
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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
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LifeStage Retirement IncomeLifeStage Retirement Income
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Enrollment—Consolidate Enrollment—Consolidate
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Enrollment—Set Aside MoneyEnrollment—Set Aside Money
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Benefits Access Benefits Access EnhancementsEnhancements
LifeStage “Do It Yourself” installment payment LifeStage “Do It Yourself” installment payment tool tool
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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)
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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
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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
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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:
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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
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Social security
CRSP DB
MPP
UMPIPCRSP DCPre’82
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Social security
CRSP DB
MPP
UMPIPCRSP DCPre’82
![Page 51: Caring For Those Who Serve U.M. Benefits Review (with General Conference changes) Missouri Annual Conference August 9, 2013 August 9, 2013 Presented by:](https://reader036.vdocument.in/reader036/viewer/2022062716/56649ddf5503460f94ad93f1/html5/thumbnails/51.jpg)
Ernst & Young Financial Ernst & Young Financial
Planning Services Planning Services
Financial Planning
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Program AdvantagesProgram Advantages
• Confidential, expert advice at no charge Confidential, expert advice at no charge
• Unlimited hours of financial planning adviceUnlimited hours of financial planning advicevia telephonevia telephone
• Financial planners (Ernst & Young, LLC)Financial planners (Ernst & Young, LLC)
• Objective advice—no products being soldObjective advice—no products being sold
• No need to enroll—just call No need to enroll—just call 800.360.2539800.360.2539or go online to set up an appointmentor go online to set up an appointment
• Free website: Free website: http://gbophb.eyfinancialplanner.comhttp://gbophb.eyfinancialplanner.com(company code:(company code: gbophb gbophb; company program: ; company program: gbophbgbophb))
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800.851.2201800.851.2201www.gbophb.orgwww.gbophb.org