Pension and Health Benefits, (CBoPHB

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The Board of Pensions and Health Benefits has worked to respond to the realities of COVID-19 and the impact that it has had on the church and the world. We have again extended the implementation of our “arrearages policy” to the end of 2022, knowing that churches are radically different than they used to 4 be, and it can take time to adjust to new realities. 5 6 We continue to be aware that our job is to care for those who have served, while also attending to the 7 needs of the churches they have served and are serving. This results in a constant awareness of balancing 8 differing needs while seeking justice and fairness. As with all other Christians and all other parts of the 9 church, we are “going on to perfection”, but we are not there yet. We are thankful for your grace as we 10 continue to work on your behalf. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Below is up to date information about the programs we offer, policies we have in place, a look ahead, a look at this moment in time, and two action items for the Annual Conference to act on.

I love the work of the Board of Pensions and Health Benefits, because our work is the work of the whole. We serve the Annual Conference, seeking to do what we can to maximize fairness and justice while caring for those who are vulnerable. I am thankful to the entire board and its officers, and to the staff of both Upper New York and Wespath who inform us, support us, and implement our decisions.

In God’s Peace, Sara Baron Chairperson, UNY Conference Board of Pensions and Health Benefits

Health Benefit Program Policies

The guidelines by whichour health benefits program is administered are presented here for the sake of clarity and understanding by all. Further information can be found on in the conference website: https://www.unyumc.org/about/pastors-compensation , click on the link “Clergy Support Policies”:

Health Benefits For Full-Time Active (under age 65) Clergy: We continue to offer the Healthflex Exchange for eligible active clergy, which combines a blended rate for churches with multiple healthcare options for participants. The blended rate in 2022 is $14,000. Participants receive a premium credit and decide what plans work best for them. Participants are encouraged to elect a pre-tax flexible spending account (HSA and/or FSA) to be deducted from their salary. The HSA and FSA are administered through Health Equity. The purpose of the pre-tax benefit is to help participants pay for deductibles and other eligible medical, dental and/or vision expenses.

The UNYAC BoPHB continues to support wellness incentives through the Virgin Pulse Health Miles Program. Participants can earn monetary rewards each year for walking, exercising and participating in wellness activities and coaching.

Blended Rate (MED)—Since our health benefit plan covers all full-time clergy, our connectional responsibility requires that every church served by a full-time pastor pay the Blended Rate. The Blended Rate is NOT an insurance premium for the individual currently servingas the church’s pastor. It is each fulltime church’s equal [connectional] share of the total Conference premium that provides health benefits for active clergy and their families throughout our diverse Conference. Retiree/Over age 65 Active Health Coverage through Via Benefits: The conference will continue our

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 agreement with Via Benefits to provide a choice of Medicare Supplement, Part D prescription, dental, vision, and/or MedicareAdvantagehealth insurance plans for the conferences current and future eligible retirees who are already enrolled or will be enrolled in Medicare. These plans will continue to be combined with an individual Health Reimbursement Account (HRA) for each eligible retiree and spouse, as applicable.

Retiree Health Eligibility: Retired clergy, age 65 or above, must be enrolled with the Social Security Administration for coverage under Medicare Part A and Part B, before they can be enrolled in the Via Benefits network.

A retired participant is eligible for the Via Benefits programif they were an active participant in the Conference HealthFlex Benefit Plan for at least five consecutive years immediately preceding their retirement effective date. The retiree must have primary coverage at retirement through Medicare Part A and Part B.

The formula for retiree HRA funding is based on 3.33% of “fully funded HRA amount” per full-time equivalent years of service up to 30 years of service and the 5-year vesting rule. CBOPHB determines the fully funded HRA amount annually.

Clergy Who Retire Before Age 65: Clergy who retire before the age of 65 may continue their coverage in HealthFlex until their 65th birthday, with a cost share. The benefits office will provide you with a calculation of your premium amount once they are notified of your official intent to retire. If such early retired clergy choose not to continue in the Conference HealthFlex program until they become eligible for Via Benefits at age 65, (i.e., they drop HealthFlex to go onto a spouses healthcare program) they will forfeit their eligibility for Via Benefits and the retiree HRA. This decision is irrevocable.

Retired Spouse HRA Deferral from AC 2020: The 2020 UNYAC referred back to the Board, a change to the HRA that was scheduled to begin January 1, 2020. We were requested to bring an updated proposal to the 2021 Annual Conference Session. We had no changes to bring to UNYAC 2021, and after an even more extensive time of analysis and conversation, we are not intending to change this policy at this time. The hard work of balancing the needs of retirees, their spouses, and our funding stream continues, but the policy we had submitted is no longer our plan.

UNYAC HealthFlex Arrearage Policy (Effective 1/1/2020, Delayed until 12/31/2022): As you may be aware, the UNYAC BoPHB, with the support of the Cabinet, approved an arrearage policy to assist us in controlling the increasing deficits year to year, due to a small number of churches and/or pastors that were not paying their direct bills.

Due to the pandemic, and understanding the struggle faced by churches and pastors, the UNYAC BoPHB voted to delay the enforcement of the arrearage policy through 12/31/2022 while graciously asking churches who are able, to please continue to pay their direct bills, and to contact the benefits office if you need to set-up a special payment arrangement. Direct bill payments in 2020 were nearly 99%. In 2021, we saw 98% payment on current obligations. We are so grateful for the hard work churches are doing to provide for their pastors, and for the ways this care is prioritized.

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Special Grants: UNYAC BoPHB has been providing assistance via special monthly grants, as established 2 in previous years and as provided for in The Book of Discipline. 3 4 The Board of Pension & Health Benefits will annually review previous and future pension grants to retirees 5 and widows/widowers but will not publish names, to protect their privacy and dignity. 6 7 The 2021 special grants included two retired clergy, one CPP participant and two clergy widows equaling 8 a cumulative annual payout of $22,407.36. 9 10 11 12 13 14 15 16 17 18 19 20 21

Pensions and Retirement Planning Clergy Retirement Security Program (CRSP) and Comprehensive Protection Plan (CPP)—75%-and-above

Appointments: We have not made changes to CRSP or CPP. CRSP pension benefits are for active clergy serving 75%-timeappointments and above. Clergy who voluntarily contribute at least 1% of their total compensation to their United Methodist Personal Investment Plan (UMPIP) account will receive a matching 1% CRSP contribution through the program to their defined contribution CRSP account, as prescribed in the plan agreement, insofar as their congregation pays their benefit obligation.

CRSP - To fund this plan, all congregations that have 75%-time-and-above appointments are billed a percentage based on their pension-based compensation (salary plus housing). There is no change to the 13.8% billing to churches.

22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 CPP – Churches with clergy in full connection, serving in 75% appointments as well as all fulltime appointed clergy, will continue to be billed 3% of the clergy’s pension-based compensation (salary plus housing). CPP offers death, long term disability, and survivor benefits to clergy and their families.

Clergy Retirement Security Program Defined Benefits (CRSP-DB) and Ministerial Protection Plan (MPP)

Annuities: The current retirement plan for clergy is CRSP, which replaced MPP. CRSP has two parts: defined contribution portion and the defined benefit portion. The defined contribution portion creates an account balance at Wespath that will be accessible to a participant after retirement. The defined benefit portion is distributed as a monthly benefit based on Denominational Average Compensation and years of service.

The Board received the pension actuarial report from Wespath dated September 24, 2021, outlining the components of UNYAC’s CRSP-DB, MPP Annuities as well as our conference specific Pre-82 report. For end of year 2021, the UNYAC 2020 owed a CRSP-DB contribution in the amount of $1,608,465 which was due by December 31, 2021. Accordingly, the UNYAC BoPHB paid the 2021 CRSP-DB contribution in its entirety. UNYAC’s CRSP is currently fully funded. The amount paid reflects current benefit accruals under CRSP-DB.

According to the report, for year-end 2022, the UNYAC BoPHB is estimated to owe $1,536,187 to Wespath for the CRSP-DB. For year-end 2023, the UNYAC BoPHB is estimated to owe $1,380,399 to Wespath for the CRSP-DB.

Retirement: Julie Valeski, UNYAC’s Benefits Administrator, once again held a very successful retirement seminar for clergy and spouses who are approaching retirement age. We will continue this program in 2022-2023.

1 Financial Planning: Wespath has partnered with EY (formerly Ernst and Young) to offer free financial

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planning services to active participants, surviving spouses, and terminated and retired participants with a pension account balance of at least $10,000. EY’s financial planners provide confidential, objective guidance on making investment decisions, saving for retirement, managing debt, understanding tax issues and evaluating insurance needs. This service has been significantly under-utilized. Retirement planning can be a confusing and stressful activity. The professionals at EY can assist you at no cost. We 7 strongly encourage you to use this amazing service. You can get started by calling EY directly at 1-800-360-2539. 8 9 Investment Update : UNYAC’s Fossil Fuel divestment resolution has been implemented and we have 10 begun making quarterly changes in our investments to remove our financial support of fossil fuels. It will 11 12 be completed over a five-year period, at the end of 2026.

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Looking Ahead

When General Conference is able to meet, there is a proposal on the table from Wespath to end the Clergy Retirement Security Program (CRSP) and move to a new plan called Compass. The Compass plan is still a retirement plan, but its design is significantly different from past retirement programs that were a combination of Defined Benefit (DB) and Defined Contribution (DC) .

The Compass plan is entirely Defined Contribution (DC). It is an account-based plan, with three types of employer contributions:

• $140 per month flat dollar contribution* • 3% contribution of pay • $1 for $1 conference match on up to 4% of pay

*amount to be indexed for inflation.

Wespath has recommended these changes to the clergy retirement plan so we can continue to provide reliable and sustainable retirement income to those who serve.

31 Pros:

32 33 • More support built into the Plan for lower paid clergy, and recent seminary graduates • Lower cost to churches

34 35 36 37 38 39 40 41 42 43 44 45 46 47 • Increased sustainability by Conferences, ensuring reliable retirement benefits for future generations of clergy • Balanced affordability with income adequacy - strives to provide sufficient retirement income for clergy, at a cost that is affordable to annual conferences • Provides flexibility that allows benefit portability for clergy and allows clergy the ability to leave account balances to their heirs • Once retired, your annuity provides you a guaranteed income stream for life (or some period), no matter how the stock market or the economy performs

Cons: • A smaller amount of money will be put into clergy retirement accounts by their church(es) and the annual conference(s) which could lead to insufficient funds in retirement if clergy do not elect pre-tax contributions from their paychecks to save for retirement • If a clergy person does not make their own pre-tax contributions in addition to the Conference

1 contribution made on their behalf, their retirement balance will be much smaller in retirement

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• The Compass program moves more of the risk/reward to the clergy person as the markets 3 fluctuate”, which means some clergy may need to revisit assumptions a little more often 4 5 It may be worth noting that if General Conference meets in 2024, and passes the legislation enabling the 6 Compass plan, it will still take some time to implement. Under those conditions, it would likely come into 7 effect in 2026. If the Compass plan passes, we will be working hard to keep everyone educated about the 8 changes, what they mean, and how to create the most secure possible retirements under this new plan. 9 10 Disaffiliation Concerns 11 12 13 14 15 16 17 18 The Board of Pensions and Health Benefits, by definition, must act in the best interest of participants and beneficiaries. We take this responsibility with utmost seriousness, and we are honored to serve all of the churches, all of the clergy, and all of the staff of the Upper New York Annual Conference of the United Methodist Church. We recognize that a time is coming when some of the churches and some of the clergy will depart from the Upper New York Annual Conference of the United Methodist Church. In order to be able to do our work, we respectfully request that the Upper New York Annual Conference carefully consider any and all plans for local church departures, to ensure that those who leave with their assets are also taking with them their fair portion of our shared liabilities.