Post on 31-Dec-2015
transcript
Caring For Those Who Serve
Those Reaching Middle Age of their MinistryMississippi ConferenceAugust 16, 2010
Presented by:
Ron Coleman
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On the Road to Retirement
• When should you retire?• When do you want to receive your
retirement benefits?• How much will you need?• Which benefit options should you
choose
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On the Road to Retirement• What are the retirement income
sources?• How to increase your pension?• Where to get financial planning?• Find out if you’re on track
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Overview
• Retirement Provisions • Retirement Plans • LifeStage Investment Management
Service (LifeStage)• Comprehensive Protection Plan (CPP)• Ernst & Young Financial Planning
Services• Pension Projections
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Denominational Average Compensation (DAC)
• Average plan compensation of United Methodist clergy serving full-time appointments
• 2010: $60,341
• 2011: $61,716
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Conference Average Compensation (CAC)
• Average annual compensation of United Methodist clergy serving full-time appointments related to a specific conference
• 2010 = $59,379
• 2011 = $60,158
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Mandatory retirement• Age 72—effective
January 1, 2009
Provisions for RetirementThe Book of Discipline ¶358
Early Retirement• Age 62 or 30 years
of service—effective
January 1, 2009
Normal Retirement• Age 65 or 40 years
of service
20-Year Retirement
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Clergy Retirement Security Program (CRSP)
2007+
CRSP1982-2006Ministerial
Pension Plan (MPP)
Pre-82 Plan(Ministerial
Reserve Pension Fund)
United Methodist Personal Investment Plan (UMPIP)
Retirement Plans
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• Service before January 1, 1982
• Pension credit—Yes or No
• Annual conference is obligated to fund a pension for those years
• Benefit = Life Annuity
Pre-1982 Benefit
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Pre–82: Benefit Paid for Life
Married participants
• Life with 75 % to surviving spouse (spouse at time of retirement)
Single participant• Single-life, no refund• Benefit ceases upon participant’s death
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Clergy Retirement Security Program (CRSP)
2007+
CRSP1982-2006Ministerial
Pension Plan (MPP)
Pre-82 Plan(Ministerial
Reserve Pension Fund)
United Methodist Personal Investment Plan (UMPIP)
Retirement Plans
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Ministerial Pension Plan: 1982–2006
• Benefit based on account balance and participant’s annuity selection
• Account balance invested until benefits begin
• MPP account balance (including accumulated earnings) remains separate until distributed in retirement
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Annuity
• A stream of payments
• Period certain (term) annuity = benefit paid over a guaranteed period
• Life annuity = benefit paid for life (if joint = two lives)
Reverend John
Smith1234 Nowhere
StreetChicago, Illinois
12345
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• Application for benefits• May leave on account until age
70½
• One-time distribution of up to 35 %of account
• “Annuitize” at least 65 % of account
• 7 Annuity options■ 0, 50, 70,75,100% survivor■ 0, 2-5 % annual increases
Retirement Distributions:MPP (Post-1981)
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Clergy Retirement Security Program (CRSP)
2007+ CRSP
1982-2006Ministerial
Pension Plan (MPP)
Pre-82 Plan(Ministerial
Reserve Pension Fund)
United Methodist Personal Investment Plan (UMPIP)
Retirement Plans
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Clergy Retirement Security Program (CRSP)
A new retirementplan, effective January 1, 2007 providing a core benefit at retirement with two components
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Defined Benefit ComponentMonthly payments, payable for life, calculated by multiplying the following and then dividing by 12:• 1.25%• DAC at time of retirement• Years of credited service from January 1,
2007Example for 2013 retirement
.0125 x $65,000 (hypothetical DAC) x 6.5 years
= $5,281 ÷ 12 = $440 per month
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Defined Contribution Component• Plan sponsor contribution of
3% of clergyperson’s plan compensation
• Account balance invested as directed by participant
• Available as cash distribution at retirement (or termination)
■ Full lump sum■ Partial lump sum■ Cash installment (e.g., monthly)
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Clergy Retirement Security Program (CRSP)
2007+ CRSP
1982-2006Ministerial
Pension Plan (MPP)
Pre-82 Plan(Ministerial
Reserve Pension Fund)
United Methodist Personal Investment Plan (UMPIP)
Retirement Plans
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UMPIP Sources
• Before-tax contributions• After-tax contributions• Rollovers
■ 401(a)■ 401(k)■ 403(b)■ IRA
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UMPIP Access
• In-service withdrawals■ Age 59½
• Hardship loans• Hardship withdrawals• Disability• Termination• Retirement
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• Benefit choices■ Full lump sum■ Partial lump sum once per quarter■ Cash Installments■ Leave on account
• Flexibility to make changes• May pass on to heirs
UMPIP
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Advantages of Investing Through the General Board• Socially responsible investing
• Competitive returns
• Low expense ratios
• Access to LifeStage Investment Management Service
• Uphold the values of The UnitedMethodist Church
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Investment Options
SVF
IPF
FIF
MAF
USEF
IEF
BSVPF• Stable Value Fund• Inflation Protection Fund• Fixed Income Fund• Multiple Asset Fund
• Balanced Social Value Plus Fund
• U.S. Equity Fund• International Equity Fund
Ris
k
Return Potential
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UMPIP Unitized FundsExpense Ratio Comparison
238Short-TermBond Funds
119Inflation
ProtectionFunds
1,151Short,
Intermediate,And Long-Term
Bond Funds
753 Funds with Balanced Objective
1,773Multi-AssetClass Funds
1,417Growth and
IncomeFunds
413Foreign Stock
Funds
0.370.49 0.49 0.42
0.700.80 0.87
0.00
0.50
1.00
1.50
2.00
2.50
3.00
SVF IPF FIF BSVP MAF USEF IEF
Source: Wilshire Compass and Lipper as of 03/31/09
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General Board Competitive ReturnsYear-to-date July 23, 2010
1.8% SVF
IPF
FIF
MAF
BSVPF
USEF
IEF
5.9%
2.0%
1.4%
1.4%
-1.6%
2.6%
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LifeStage Investment Management Service (LifeStage)
LifeStage Investment Management Service (LifeStage)—managed accounts
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LifeStage
• Creates a customized investment portfolio for you
• Reviews asset allocation annually
• Rebalances your account as needed
• Allows you to focus on other things
Benefits:
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LifeStage: Fund Selection Feature
Risk Tolerance
Age
GBOPHBAccount Balances
Value of Social
Security Benefits
Age at Retirement
Social Security Eligibility
▪Fixed Income Fund
▪ Inflation Protection Fund
▪U. S. Equity Fund
▪ International Equity Fund
▪Stable Value Fund
Target Fund Allocation
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LifeStage: Rebalancing Feature
Before Actual Fund Allocations
After Actual Fund Allocations
No participant intervention required
▪ Fixed Income Fund▪ Inflation Protection Fund▪ U. S. Equity Fund
▪ International Equity Fund▪ Stable Value Fund
13% 13%
34%14%
26%
14%
29%
17%
27%
13%
▪ Fixed Income Fund▪ Inflation Protection Fund▪ U. S. Equity Fund
▪ International Equity Fund▪ Stable Value Fund
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CPP Retirement Eligibility
• Eligible to receive a benefit from CRSP■ Two consecutive years preceding retirement
■ At least five of the 10 years immediately preceding retirement or 25 years
January 1, 2009
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CPP Death Benefits 2010Active: $50,000
Retired: 30% of DAC ($18,102)
Spouse: 20% of DAC ($12,068)
Surviving spouse: 15% of DAC ($ 9,051)
Child: 10% of DAC ($ 6,034)
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Consultation Topics
• Creating a retirement plan• Choosing retirement plan investments• Buying a home• Developing an estate plan• Managing debt• Funding children’s education• Evaluating insurance needs and
options