Feeling pressure from all sides,
BOP shows no signs of stress
By Carmen Fowler, The Layman, October 26, 2010
FORT. MYERS, Fla. – With $6.9 billion under management in the most volatile investment market anyone in the room has ever seen, the Board of Pensions (BOP) of the Presbyterian Church (USA) President Robert Maggs exuded confidence in his staff, the 2011 business plan and practices being employed to minimize the risk of plan members’ personal information being exposed.
“There is no bad news right now,” Maggs assured the board, “from a risk and substantive profile, we’re in good shape.”
Maggs acknowledged that compliance work has increased 100 fold in 10 years and that the number of legislative and regulatory requirements that the BOP will have to respond to in the Healthcare Reform Act remain unclarified.
Of primary concern is described by Maggs as “the control group issue.” Of the more than 10,000 congregations in the PCUSA, 8,000 have members in the plan. Most of those congregations have far fewer than 25 employees but some have many beyond that “small business” threshold.
“So,” Maggs wondered, “are we one big plan, qualifying as a single employer or are we lots of little plans with some 8,000 employers?” That question remains unanswered in Washington and the BOP is actively working with the Church Alliance to achieve a more favorable status for church plans. Maggs identified this effort as a “very high priority for us in 2011.”
Looking back, Maggs noted that in 2002 one of the greatest risks identified for the BOP was in management succession planning. The expertise of individual staffers is admittedly extraordinary. The challenge is in answering the question of what happens if even one of those individuals is removed from the mix. Maggs reported that succession planning is now in place for all key positions and that the BOP now exhibits “excellent management depth.”
Delving further into the arena of risk management, Maggs reported that the test of the secure data location (which is miles away from the board’s primary offices in Philadelphia) “went very well.” Should something catastrophic occur and the Market Street location be unusable, “staff have the ability to work from home and from what is now considered our primary data site” in King of Prussia, Pa.
All of this good news comes in the midst of very real pressure on all sides.
In addition to the aforementioned Healthcare Reform Act, a highly volatile economic environment, diminishing membership in the plan coupled with rising healthcare costs and lengthening actuarial tables for pension benefits, the board is facing the added challenge of the General Assembly’s urging to extend the pan to include the domestic same-sex partners of plan members.
The chairman named a 9-member special committee to assist the board in listening to the concerns of the church and formulating a response. No official timeline was established for the committee’s work and the committee’s charge is expected to be more fully developed after they meet. Maggs acknowledged that “informal discussions suggest that clarification is needed.” Most notably he mentioned that “the committee will want to stress the importance of theological discernment.” It was agreed that the initial 8-point charge was considered a working draft and was excluded from the 2011 business plan before that plan was approved by the board.
In addition to approving the amended 2011 Business Plan, the board also approved the $35,226,000 administrative budget and a $1,260,600 capital budget.
Other actions included:
- Approved a 6.9-percent increase in the monthly subscription dues per participant for non-ABP continuation members. ABP is the Affiliated Benefits Program designed to provide continuing benefits for members who are no longer covered by employing organizations but desire to continue as members of the plan. The increase will raise monthly dues from $332 to $355 for those enrolled prior to 1987 and from $564 to $603 for those enrolled after 1986. The dues increase will be effective Jan. 1, 2011.
- Approved increases for 2011 Medicare Supplement Plan participants. Traditional program participants paying $199/month in 2010 will pay $205/month in 2011. Limited income members will see an increase from $125 to $129/month and Affiliated Benefits Program participants will see their costs rise from $279 to $287/month in 2010.
- Amended the benefits plan to expand the authority of the board’s discretion to permit the continuation of disability benefits in circumstances where the member is totally disabled but a partial return to some form of meaningful work is determined to be possible and in the best interest of the disabled member.
- Approved changes to the investment committee charter including the inclusion of “Church Relations” to the Social Responsibility committee.
- Authorized proxy voting in accordance with established guidelines.
- Approved the Endowment Fund distribution policy of 5 percent (the Endowment Fund is held in custody by the BNY Mellon and had a market value of $15.7 million on July 31, 2010).
- Approved the spending policy for the Assistance funds at 6.5 percent.
- Approved the distribution of Christmas gifts of $250 for each single person and $500 for each married couple receiving a Housing and/or Income Supplement.
Medical Plan members will also be receiving notification of several plan changes effective Jan. 1, 2011, including:
- A vision program that will provide for an annual eye exam ($25 co-pay) and the utilization of Vision Service Plan (VSP) as the provider of a fully-insured vision benefit.
- A disclosure that the traditional program is a grandfathered health plan under the Patient Protection and Affordable Care Act (PPACA).
- Notification of an annual dollar maximum of $3.5 million on benefits in lieu of the lifetime dollar maximum.
- A rescission document designed to facilitate administration of the provision in the PPACA that prohibits the retroactive termination of benefits for any reason other than fraud, intentional representation or material fact or failure to pay dues.
- Clarification of the coverage related to Advanced Reproductive Technology.
The Board of Directors will meet next on March 3-5, 2011, in Philadelphia.