News Release -- 2001

BBT Board receives a plan for providing long-term care insurance for pastors and church workers

December 12, 2001, Elgin, Il

A basic plan for providing long-term care coverage for pastors and church workers was presented to the Brethren Benefit Trust Board at its fall meeting, Nov. 16-17, in Akron, Ohio.

As presented by staff, the plan calls for a long-term care benefit that would provide $1,000 a month in coverage for up to three years to all pre-retired BBT Pension Plan participants. BBT would act as the overarching employer, which would keep the benefit non-taxable. In turn, a small fee would be assessed against plan member accounts to cover administrative costs.

“Providing retirement benefits for church employees is not only about providing income through pension accounts, but is also about protecting those assets from erosion,” said Don Fecher, BBT Pension Plan and Employee Financial Services director. “There is solid evidence that many of us don’t look far enough down the road at what our needs will be in the future; an individual’s pension assets can be quickly depleted by excessive or unexpected medical costs, especially during retirement years.”

“This benefit responds in part to a real need of our members but does not respond to the full need,” said BBT President Wil Nolen, citing that the average cost at the 24 Brethren retirement homes is roughly $3,000 per month.

“This proposed benefit is a significant step to get us going, and would provide guaranteed coverage for many who would not be able to get something like this on their own,” Nolen noted. “However, employees should consider upgrading on their own according to their specific projected needs.”

Options available to individuals could include the purchase of additional coverage. The plan could also be fully portable with the same cost and coverage.

BBT staff are expected to present a formal long-term benefit proposal to the Board in April.

Pension funds made available to plan members with severe financial needs

BBT Board members approved changes to Brethren Pension Plan guidelines that will allow plan members with severe financial needs to take “hardship withdrawals” from the employee portion of their pension accounts.

“A challenge some of our active members face is struggling to save for retirement while meeting current needs,” said Don Fecher. “A hardship withdrawal is a last-ditch effort for participants who have ‘an immediate and heavy financial need’ arising from uninsured medical expenses, costs relating directly to the purchase of a principal residence, payment of tuition and related educational fees, or payments necessary to prevent eviction from one’s residence.”

All attempts to uncover other sources of income would be made prior to granting a hardship withdrawal, Fecher said. This would include first assessing whether an individual would be eligible for grant assistance under Church Workers Assistance Plan provisions.

Brethren Medical Plan prepares for short- and long-term solutions

BBT Insurance Plans director Jeff Garber reported that staff this fall engaged in negotiations with current insurance carriers to hold down premium increases for Medical Plan members for 2002. This was especially the case for many active members within the ministers group, who would have faced 43-percent increases.

“Through negotiations and plan design modifications geared to steering plan members to using network providers, Insurance staff were able to negotiate only 23-percent increases in premium rates for this group,” said Garber.

Looking beyond 2002, BBT Insurance staff have been in conversation with Mennonite Mutual Aid regarding possible coverage for Brethren Medical Plan members within MMA’s Congregational Employee Plan.

BBT investments continue beating benchmarks in a down economy

The Board’s Investment Committee noted that the world’s financial markets were dramatically impacted by the events of Sept. 11. BBT staff were in contact with fund managers right away to determine whether BBT’s investment strategy needed to be modified. While a few securities were found to be exposed more than others — such as airlines and insurance companies — the decision was made to continue with BBT’s diversified investment strategy.

Even during this difficult investment year, BBT investments continued to meet or exceed industry benchmarks. While BBT’s domestic stock and balanced funds were both down for the year, they outperformed their respective benchmarks. The domestic stock fund, for example, is ahead of the Standard and Poor’s 500 Index by 0.9 percent for the year.

In further testament to the soundness of BBT’s investment diversification strategy, the Bond fund performed as intended, picking up the slack for equities and thus stabilizing investments overall with a year-to-date gain of 11.4 percent. Likewise, BBT’s Short-Term fund continued adding value to cash balances, outpacing the return on its benchmark, three-month Treasury bills, by almost two percentage points (5.2 percent versus 3.3 percent for the index).

Investment managers pursue additional value for the Bond fund

The Board approved revising its guidelines to allow Bond fund managers to invest up to 15 percent of holdings in high-yield securities. Such investments might include relatively new companies or ones that have been around for a while but which are currently undervalued, explained Gail Habecker, Investment Committee chair.

BBT guidelines previously specified that managers could not invest in high-yield bonds or companies less than three years old. However, conversations in recent years with Criterion — one of BBT’s Bond fund managers — and the research Criterion has provided tracking the long-term performance of high-yield bonds compared to investment-grad corporate bonds, has convinced BBT’s Investment Committee members that “there is a time and a place to invest in high-yield bonds,” said Habecker.

BBT increases its focus on shareholder advocacy

As a member of the Interfaith Center on Corporate Responsibility, BBT took an active role in shareholder advocacy throughout the year and plans to increase its advocacy role in 2002. Will Thomas, BBT director of Foundation Operations, is scheduled to present a shareholder resolution in Louisville, Ky., next spring at the annual meeting of Tricon, owner of Pizza Hut, Taco Bell, and Kentucky Fried Chicken restaurants. He will seek a company-wide no-smoking policy in all restaurants. Other shareholder initiatives in which BBT is currently involved include resolutions with Sears on vendor standards, Chevron/Texaco on global warming emissions, and BP Amoco on drilling in the Arctic National Wildlife Refuge.

In addition to shareholder activism, BBT also practices divestment as a socially responsible investor investment strategy. BBT’s fund managers are directed to abstain from buying companies that don’t uphold Brethren values of peace, social justice, and respect for the environment, such as those representing the alcohol, tobacco, gaming, and defense industries.

Other business

General

*The Board congratulated staff members Don Fecher and Will Thomas on obtaining their Series 7 securities license. They now are qualified to provide general financial planning and investment information and education to individuals and Brethren Foundation clients.

Brethren Foundation

*Staff reported that an increased emphasis will be made of BBT’s Charitable Gift Fund, which enables individuals to establish a fund to which they can donate regularly and receive annual tax benefits. The fund increases over time, allowing a larger contribution to then be made to the gift’s recipient.

Brethren Pension Plan

*The Board approved raising the annual contribution limits to the Pension Plan and to allow the transfer of funds from other employer retirement accounts into Brethren Pension Plan accounts. This is now possible due to last summer’s passing of the Economic Growth and Tax Relief Reconciliation Act, which allows for the co-mingling of 401k, 403b, and 457 retirement accounts.

*The Board approved a housing allowance exclusion of up to 100 percent of total retirement compensation for retired ministers.

eMountain Communications

*Staff reported that eMountain Communications has started hosting www.CoB-Net.net, an unofficial denominational network of Web sites that hosts the official presence of more than 50 congregations and districts. A partnership with the Brethren Business Network to develop an online directory of Brethren business providers was also reported.

*Staff also reported that the multimedia Brethren Heritage CD-ROM developed with Brethren Press is nearing completion.

Employee Financial Services

*Board members approved a 2.6 percent increase to the Church Workers Assistance Plan income guidelines for 2002, raising the income level to $24,600 for couples and $18,500 for singles.

*Approved a lump-sum Supplemental Income for Equitable Annuitants grant of $162,927, to be distributed among eligible retired lay employees of the General Board.

Insurance Plans

*The Board approved a housing allowance exclusion of up to 100 percent of gross income for ministers receiving a long-term disability benefit.

*Staff reported the continued exploration of possibly assisting Brethren retirement communities with finding a viable group long-term care plan for their independent living residents.