Report of the
Board of Pensions
2007 Review and Status (figures rounded for simplicity):
The total of Ministers’ Retirement Fund (MRF) annuity payments to beneficiaries in 2007 was $211,300 (compared to $215,900 in 2006 and $208,300 in 2005): See Statement of Cash Receipts and Disbursements. This is the first year that the total disbursements have declined. There are 8 future beneficiaries of the MRF, the youngest of which will begin receiving benefits at age 65 in the year 2013. There was one beneficiary who went home to the Lord in 2007. Based on the current mortality assumptions, the final year of MRF payments to beneficiaries is projected to be 2036. Between now and then, it is estimated that the MRF will distribute future benefits totaling nearly $3,500,000. The Present Value lump sum cost of funding these future annual benefits is $2,090,000. During 2007, the Net Assets in the MRF continued to fall as expected, and are now ($90,300), as illustrated on the Balance Sheet. Therefore, the present value shortfall is approximately $2,180,000, which is being funded by contributions from the Administrative Budget and the churches. To provide future retirement benefits for current pastors, the Faith & Order requires churches to contribute to each pastor’s individual 403(b) account (the Ministers Annuity Fund, or MAF) at a minimum rate of 3% of Schedule SE compensation (4% if the pastor is also making voluntary contributions). If you are a pastor and your church is not making their contribution to your 403(b) plan, contact the Secretary of the Board, Keith Plows, at P.O. Box 323, 228 Hope Street, Stockertown, PA 18083.
Interest Bearing Notes:
As approved by the 119th Annual Conference (April, 2002), the Board of Pensions began to issue interest bearing notes in 2003 to cover the near-term liquidity shortage of the MRF. In 2007, $40,000 of Notes were issued (in 2006, no Notes were issued). The total of Notes outstanding is
$130,000. PTL: Based on the current projection, the Board would need to issue only $25,000 of Notes during the next 4 years (2008 through 2011). This is a significant improvement from last year’s projection calling for $160,000 worth of Notes during those years. The Notes have a 5-year maturity, and carry an interest rate equal to the yield on the 5-year US Treasury Note at date of issue, plus 2.5%. In order to meet the liquidity needs of the Ministers’ Retirement Fund for 2008 through 2011, IT IS CRITICAL that the agencies and churches support the issuance of the Notes. Otherwise, the BFC will need to arrange for commercial loans through their banking relationships, at substantially higher cost to the Board of Pensions. If an agency or church has long-term investment assets (legacies, endowment funds, building funds, etc) currently invested in money market funds, CDs or bonds, prayerful and serious consideration should be given to redirecting a portion of those assets to the Board of Pension Notes. Agencies and churches that may be interested in subscribing to the 2008 or 2009 Notes offering should contact Rick Volpe via e-mail at rick@assetplanningservices.com. Subscription requests will be first come, first served, with the Agencies having priority.
Annual Funding:
PTL: Based on the current projection, future long-term funding requirements by the churches and Conference have been reduced (compared to prior years’ reports) while still arriving at a “soft
landing” in 2036. The Board of Pensions is requesting a contribution from the Administrative Budget in the amount of $69,000 for 2009, and $72,000 for 2010. As projected for the past several years, the near-term contribution rate for churches will increase in 2009 to $1,000 per church plus $10.00 per member for calendar years 2009 through 2011. Long-term projected contributions from the Churches and the Administrative Budget are shown in the accompanying table labeled “Annual Contribution Data & Assumptions”.
Planned Giving:
Early in 2008, the Board received notice that it will receive a bequest from the estate of a
BFC member that may eliminate the need to issue any Notes in 2008. This bequest will further improve the current projection, and will be illustrated in next year’s report. The Board of Pensions urges other members of the BFC to consider including the MRF in their estate planning arrangements. The simplest and most tax efficient method would be to name the MRF as a contingent or primary beneficiary (for married or singles, respectively) of a portion of an IRA or 403(b) account. This arrangement can be adjusted or revoked at any time, and does not involve changing one’s Will. For more information, please contact the Board at P.O. Box 148, Harleysville, PA 19438 or e-mail to Rick Volpe at rick@assetplanningservices.com.
The Board of Pensions recommends the following resolutions to Annual Conference:
1. Whereas, the MRF annuity rate for 2008 is $217 per year of service, and
Whereas, partial cost-of-living adjustments are part of the long-term phase out strategy of the MRF, therefore be it
Resolved, that the MRF annuity rate for calendar year 2009 be $218 per year of service.
2. Whereas, starting in calendar year 2006, the per church and per member contribution rates to the MRF have been $900 / $9.00 respectively, and
Whereas, periodic inflation and mortality adjustments to the contribution rates have been part of the long-term MRF strategy, therefore be it
Resolved, that beginning in calendar year 2009, the per church and per member contribution rates to the MRF be $1,000 / $10.00 respectively.
3. Whereas, the Department of Church Extension Ministries is investigating church plant affiliations outside of the United States, and
Whereas, some of these affiliations may be with established churches that could become recognized churches of the BFC as early as 2008, and
Whereas, for the first 5 years after their admission to the BFC, newly recognized churches are required to support the MRF at 50% of the normal contribution rate, and
Whereas, the assessment could be an undue and disproportionate burden on these non-American churches,
Resolved, that these churches be exempt from supporting the MRF until the Board of Pensions, in conjunction with Church Extension Ministries, investigate an appropriate contribution rate for presentation to the 116th Annual Conference in 2009.
Resolution Relating to Rental/Housing Allowances for Retired or Disabled Ministers of this Conference for Calendar Year 2009
4. Whereas, the religious denomination known as The Bible Fellowship Church has and functions through Ministers of the Gospel who are duly ordained or licensed; and
Whereas, the practice of The Bible Fellowship Church is to provide a parsonage or a rental allowance as part of the gross compensation for each of its active ordained or licensed ministers; and
Whereas, pensions paid to retired and disabled ordained or licensed ministers of The Bible Fellowship Church are considered as deferred compensation and are paid to said retired and disabled ordained or licensed ministers in consideration of previous, active service; and
Whereas, the Internal Revenue Service has recognized that The Bible Fellowship Church is the appropriate organization to designate a housing/rental allowance for retired and disabled ordained or licensed ministers who are members of this Conference;
Resolved,
1. An amount equal to 100% of the pension payments received during the year of 2009 be and is hereby designated as a rental/housing allowance for each retired and disabled ordained or licensed minister of The Bible Fellowship Church who is or was a member of the Bible Fellowship Church Minister’s Retirement Fund.
2. This rental/housing allowance shall apply to each retired and disabled ordained or licensed minister who has been granted the retired relationship or placed on disability leave by the Bible Fellowship Annual Conference and whose name and relationship to the conference is recorded in the Yearbook of the Annual Conference of the Bible Fellowship Church and in other appropriate records maintained by the conference.
3. The pension payment to which this rental/housing allowance applies shall be the pension payment resulting from all service of such retired or disabled ordained or licensed minister from all employment by any local church, Annual Conference or institution of The Bible Fellowship Church or of any former denomination that is now a part of The Bible Fellowship Church, or from any other employer who employed the minister to perform services related to the ministry and who elected to make contributions to the pension funds of The Bible Fellowship Church for such retired minister’s pension.
Note: The rental/housing allowance which may be excluded from a minister’s gross income is limited to the lesser of (1) the amount of the rental/housing allowance designated by the minister’s employer or other appropriate body, (2) the amount actually expended by the minister to provide his or her housing, or (3) the legally-determined fair rental value of the parsonage or other housing provided. As specified in Rev. Rul. 71-290 C.B. 92, “the only amount that will qualify for exclusion under section 107(2) of the Code as a ‘rental allowance’ is an amount equal to the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities.”
Board of Pensions: David J. Watkins, Chairman; Keith Plows, Secretary; Jay Fastnacht, Robert Gaugler, Ellis Hostetter, Clyde D. Bomgardner, Jr, David Schoen, Thomas Shorb, Richard J. Volpe.