The Board Bulletin is published after each regular meeting of the Board of Directors of The Board of Pensions of the Presbyterian Church (U.S.A.), and represents key information and actions taken that affect plans and programs administered by the Board of Pensions.
Accountability to the Church and Benefits Plan members for the resources entrusted to it is of paramount importance to the Board of Pensions. In accordance with its bylaws, the Board of Directors’ second meeting of the year is to be the annual meeting, at which the final audited financial statements for the prior year are presented. On July 17, 2020, the Board of Directors concluded the annual meeting, during which the 2019 audited financial statements and the 2019 Annual Review were presented.
The COVID-19 pandemic has reached every corner of Board of Pensions operations, as it has the Church as a whole. Like the 224th General Assembly (2020), the summer 2020 meeting of the Board of Directors convened online and followed a streamlined schedule. Agency staff and Directors attended remotely.
The Board of Pensions staff has been working remotely for four months. The agency continues to live fully into its commitment to service excellence and to meet its fiduciary obligations. It also has been able to provide unprecedented support to employers in the form of dues waivers and deferments and assistance grants, which were distributed among hundreds of distressed employees.
Although apart physically, the agency’s employees stood together as George Floyd’s murder blew a sense of urgency into the Black Lives Matter movement. The Board published a statement, urging movement “from lament to hope, from hope to real change.” The statement was posted on pensions.org June 18, and shared on social media. It is now the touchstone for the Board of Pensions as it develops a strategy and plan of action to live into the call of the Church to dismantle structural racism.
Against this backdrop of racial reckoning and COVID-19 crisis, Fredric J. Bold Jr. oversaw his first Board of Directors meeting as Chairperson, a role he assumed from the Reverend Dr. Fairfax F. Fair at the close of the 224th General Assembly. Mr. Bold presented the eight individuals elected by General Assembly to serve on the Board of Directors and reviewed their committee assignments. The report on that action and others by Directors follows.
Donald A. Walker, Executive Vice President and Chief Investment Officer, reviewed the Board of Pensions Balanced Investment Portfolio within a framework of global health, economic, and political events. Returns exceeded the 6 percent return target in longer time periods — 20-year, 6.1 percent; 15-year, 6.5 percent; 10-year, 7.9 percent — while underperforming in the short and intermediate time frames — five-year, 5.2 percent; three-year, 4.8 percent; one-year, 4.0 percent; year-to-date, negative 6.1 percent.
The portfolio is the investment fund for the Pension Plan, Death and Disability Plan, Endowment Fund, and Assistance Program assets as well as for restricted gifts made to the Board of Pensions. On May 31, 2020, the portfolio had a market value of $9.4 billion.
Suzanne P. Welsh, Chair of the Investment Committee, provided an overview of the work of the Investment Committee on behalf of Benefits Plan members and their beneficiaries.
The Committee reviewed the asset allocation, investment performance, and costs of the investment options in the 403(b)(9) Retirement Savings Plan of the Presbyterian Church (U.S.A.) and the 401(k) New Covenant Retirement Savings Plan. The Committee reviewed the fixed income component of the Balanced Investment Portfolio and approved a new illiquid growth investment in a secondaries fund strategy.
The Committee confirmed that the May 31, 2020, asset allocation of 34 percent in U.S. stocks, 20.3 percent in international stocks, 31.5 percent in fixed income, and 14.2 percent in other assets is within approved ranges. The Committee affirmed current long-term strategic asset allocation ranges for the Balanced Investment Portfolio.
The Board of Directors approved significant reductions to the 2021 total maximum out-of-pocket limit for all three coverage options in the Medical Plan — preferred provider organization (PPO), exclusive provider organization (EPO), and high deductible health plan (HDHP).
The maximum out-of-pocket is the total annual dollar amount paid by an individual and/or a family for covered medical services and prescription drugs before a health plan pays 100 percent of remaining covered expenses. Typically, in a given year, most people do not meet their plan’s out-of-pocket maximum.
For 2021, the total maximum out-of-pocket for the Medical Plan’s PPO, EPO, and HDHP is $5,000 for members and $10,000 for families. Currently, these annual limits are $7,900 and $15,800 for the PPO and EPO and $6,750 and $13,500 for the HDHP.
For the fourth consecutive year, Directors did not change rates for the Medicare Supplement Plan. Careful management and aggressive contract negotiation created a positive outcome for 2021.
Directors approved continued negotiation with Express Scripts to provide prescription drug benefits for the Medical Plan and Medicare Supplement Plan. The three-year contract is anticipated to begin January 1, 2021. Currently, the Board of Pensions partners with OptumRx to provide these benefits.
Express Scripts, one of six pharmacy benefit managers to submit a proposal, was selected for negotiation through a bidding process managed on behalf of the Church Benefits Association purchasing coalition. As a leader in the coalition, which includes 22 denominations and represents over 350,000 covered individuals, the Board of Pensions maximizes its bargaining effectiveness.
The Directors reaffirmed the designation of the following advisers and auditors:
Eight new Directors were welcomed at the July 2020 meeting of the Board of Directors. Their demographic backgrounds are diverse, as is their professional expertise. They were assigned or elected to serve on the following committees:
The location of the next meeting of the Board of Directors, scheduled for October 22-24, 2020, is under review, as conditions around COVID-19 remain in flux. For further information, email the Corporate Secretary or call 215-587-7600.