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 23, 2022, the Board of Directors concluded the annual meeting, during which the 2021 audited financial statements and the 2021 Annual Review were presented.
The Board of Directors annual meeting formally moved the Board of Pensions into the next chapter of transformation. A new, 14-member class of Directors, elected by the 225th General Assembly (2022), arrived ready to share a rich, diverse set of gifts. A new Chairperson, the Reverend Margaret O. Fox, called the meeting to order in prayer. She is joined in her service by the new Vice Chairpersons, Andrew Junkin and S. Bradley Perkins.
Directors oversee the investment of plan funds; management and administration of pension, medical, and death and disability benefits; and operation of the Assistance Program. They serve on at least two of eight committees: Assistance and Church Engagement, Audit and Compliance, Board Development and Governance, Executive, Healthcare, Investment, Legal, and Pension.
Generally, Directors’ terms run four years and two terms can be served consecutively. The tenure of the Directors who came before this new class oversaw an unprecedented expansion of access to agency benefits and programs. An era of transformation was launched. This new class of Directors is expected to continue this historic transformation, supporting the agency in serving more, serving better, and serving the Church.
Vivian D. Wesson was in attendance as the agency’s newly elected General Counsel and Executive Vice President. Jean C. Hemphill of Ballard Spahr, longtime outside counsel to the Board of Pensions, is continuing as the agency’s relationship partner with the law firm.
Donald A. Walker, Executive Vice President and Chief Investment Officer, reviewed the Board of Pensions Balanced Investment Portfolio in the context of volatile global markets and geopolitical events — including rising interest rate levels, falling stock and bond performance, and inflation expectations.
Returns exceeded the 6 percent return target in each of the following annualized time periods — 20-year, 7.5 percent; 15-year, 6.2 percent; 10-year, 8.8 percent; five-year, 7.9 percent; three-year, 9.7 percent; and two-year, 12.8 percent. The recent market volatility has led to Balanced Investment Portfolio year-to-date returns of negative 8 percent. This compares favorably to the year-to-date performance of a blended benchmark — including 65 percent global stocks, 30 percent global bonds, and 5 percent cash — of negative 10.9 percent.
The Balanced Investment Portfolio is the fund in which Board of Pensions-administered plans and programs are invested. On May 31, 2022, the portfolio had a market value of $11.1 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 discussed the fixed income component of the Balanced Investment Portfolio.
The Committee approved a new U.S. equity strategy and a new global investment strategy. Additionally, the Committee approved five new fund investments: one real estate fund, one private credit fund, one private equity secondaries fund, one venture capital fund, and an opportunistic fund.
The Committee confirmed that the May 31, 2022, asset allocation of 35.1 percent in U.S. stock strategies, 22 percent in international and global stock strategies, 28.5 percent in fixed income, and 14.4 percent in other assets is within approved ranges. The Committee affirmed current long-term strategic asset allocation ranges for the Balanced Investment Portfolio.
Directors approved an increase in Pastor’s Participation dues for the first time in five years. Effective January 1, 2023, medical dues will increase 2 percent, from 27 percent to 29 percent. As a result, total dues for the benefits package will be 39 percent, up from 37 percent. Directors raised the cap on the maximum annual dues amount by $1,500, from $33,500 to $35,000, and on the minimum annual dues amount by $500, from $11,000 to $11,500.
The vote to increase dues followed a review of cost forecasts by Milliman Inc., the agency’s medical actuarial counsel. Healthcare costs spiked in 2021 as medical costs continued to climb and healthcare use increased following the coronavirus crisis.
In summarizing actions taken at General Assembly, the Reverend Dr. Frank Clark Spencer, agency President, discussed specific requests directed to the Board concerning parity of medical dues and affordability for small congregations, particularly within communities of color. He affirmed the need for ongoing evaluation and assessment of existing benefits structures that may not best serve an evolving denomination. And he reiterated the Board of Pensions’ commitment to providing affordability and flexibility in its benefits and to eliminating plan designs that perpetuate disparities and inequities.
The Board of Directors authorized staff to establish the 2023 rate for the Medicare Supplement Plan, with any increase not to exceed $65 per participant per month. The rate has remained unchanged for five years. A rate increase is expected for 2023 based on Milliman’s experience analysis and forecast of future costs. The most up-to-date information on claims experience is available in the fall. Staff will report the 2023 rate at the October Board of Directors meeting. It would be effective January 1, 2023.
Board of Pensions staff and Directors reviewed a new pilot program enabling Medical Plan enrollees to be reimbursed for travel expenses when they seek medically necessary covered services that are not available within 150 miles of the member’s residence. The pilot designates a maximum of $2,500 per episode of care for reasonable transportation and lodging for the covered person and a companion.
Members must contact Quantum Health before services are rendered and submit receipts for expenses with an application to Quantum Health for reimbursement. Plan members are asked to direct questions to Quantum Health.
The program, effective immediately, responds directly to inquiries received by the agency since the U.S. Supreme Court overturned Roe v. Wade. However, it is available for all covered services and is not limited to reproductive care.
The Directors reaffirmed the designation of the following advisers and auditors:
The Board of Directors welcomed 14 new Directors, elected by the 225th General Assembly (2022). They were assigned or elected to serve on the following committees:
Directors approved the appointment of Vivian D. Wesson, the agency’s newly named General Counsel, as Corporate Secretary and Andrew J. Browne, Senior Vice President, as Assistant Corporate Secretary. The appointments are in addition to their current roles.
The next meeting of the Board of Directors is scheduled for October 27-29, 2022, in Fort Myers, Florida. For further information, email the Corporate Secretary or call 215-587-7600.