|
News Release -- 2003 BBT Board approves community development investment optionJanuary 10, 2003, Elgin, Ill.A new investment option that will help finance low-income community development projects around the U.S. and the world will soon be available to Brethren Pension Plan and Brethren Foundation participants. The Community Development Investment Fund, which will give Plan members and Foundation clients a guaranteed three-percent rate of return each year beginning in 2003, will help underwrite community development projects in areas of need. The BBT Board approved the creation of this fund during its Nov. 23-24 meetings at the Church of the Brethren General Offices. “The impact of this fund will be at the grassroots level in community projects that make a difference,” said Wil Nolen, BBT president. “Our members will be able to invest their monies and receive a fair return while helping those in need.” The creation of this fund is in keeping with BBT’s mission of providing Pension and Asset Management services for Brethren members and agencies while affecting change through the promotion of Church of the Brethren values. This fund will complement BBT’s social advocacy initiatives, where staff and representatives work to persuade companies in which BBT owns stock to adopt practices and procedures that are in keeping with statements, resolutions, and policies of the Church of the Brethren Annual Conference. BBT’s community development investments will directly impact disadvantaged communities. Investments will be placed with a development bank or credit union and will be used to finance loans within that community. Loans are typically for the construction or rehabilitation of low-income housing; to assist low-income people in starting or expanding their own businesses; or to support non-profit organizations in their work with disadvantaged people or communities. Investments in BBT’s Community Development Fund will be through Calvert Foundation’s Community Investment Notes and Community Investment Management Accounts. BBT will also direct some of its international investments through Calvert’s International Community Development Notes to be invested in countries where the Church of the Brethren is currently active, such as Nigeria, Sudan, Dominican Republic, Brazil, Guatemala, and Honduras. Because Community Development investments come with greater risk than some investments, BBT will place no more than one percent of all investments under its control in this new option. In related news, the BBT Board approved a second new investment choice for Brethren Foundation clients, a domestic small cap stock fund, which will contain investments in companies that have a market capitalization of less than $2 billion. The Board also approved adding a small cap manager to the Retirement Benefits Fund and to the Pension Plan’s Common Stock Fund. Once a small cap manager is hired, 10 percent of the Retirement Benefits Plan will be invested in small cap stocks. Ten percent of the Pension Plan’s Common Stock Fund will also be invested in small cap stocks, with 30 percent in core/index stocks, 30 percent in growth stocks, and 30 percent in value stocks. Adjustments are made to undergird Retirement Benefits Fund Faced with twin challenges that are adversely and simultaneously impacting the Brethren Pension Plan, the BBT Board approved two measures to help maintain proper funding of the Plan’s Retirement Benefits Fund. The first challenge pertains to the ever-increasing life expectancy within the U.S. and the actuarial tables used to predict life spans. These tables, used by life insurance and pension firms to help determine rates and annuities, often are obsolete because of infrequent updates. The current 2000 table used by BBT, which succeeded a 1983 table, is expected to be used throughout this decade. Using an unmodified actuarial table over a number of years when life expectancies continue to rise is problematic in that monthly payments for new annuitants are calculated too high because the actuarial table anticipates a shorter lifespan. Thus, new annuitants on average receive higher payments for longer periods of time, exceeding their contributions to the Plan. Over time these factors could challenge the fiscal soundness of the Plan. The second challenge the Board faced is the erosion of the Fund’s reserves. Because of the stock market’s decline over the past three years, the value of the Retirement Benefits Fund has been significantly reduced. The 25-percent reserves the Fund carried as of three years ago to make sure the Plan could meet all of its future obligations have been eroded by this downturn. At the end of June that surplus was nearly depleted. The BBT Board considered its options for stabilizing the Retirement Benefits Fund, which included the accepted industry practice of adjusting the actuarial table to make it realistic with increasing life expectancies or reducing the long-standing eight-percent assumption rate for which Brethren Pension Plan annuities are calculated. After much discussion, the Board approved a 10-percent adjustment to the 2000 actuarial table for Plan members who annuitize after July 1, 2003, to more closely reflect true life expectancy calculations. The Board directed staff to bring a recommendation to the April meeting regarding the designation of a portion of BBT’s general reserves to the Retirement Benefits Fund. Such a recommendation would help provide a surplus in the Fund until the economy rebounds. The Board also approved continued research on assumption rates, with a report by staff due at the Board’s April meeting. In addition, the Board plans to review the actuarial tables annually and consider making additional adjustments. Brethren Medical Plan’s new insurance plan made debut on Jan. 1 The Brethren Medical Plan launched its new insurance program on Jan. 1. On that date, all Plan members began receiving insurance through the Congregational Employee Plan (CEP), a joint venture of BBT and a handful of other Protestant denominations. For Brethren Medical Plan members, their first $10,000 of claims each year will be covered by BBT while claims above that amount will be pooled together among all participating denominations and paid by a common reinsurer. The change has been two years in the making as Brethren Medical Plan staff looked for a long-term solution at providing insurance equitably among all Plan members. “We think this is the best opportunity to provide a strong medical plan for years to come,” said Jeff Garber, director of Insurance Plans. “Joining the Congregational Employee Plan enables us to offer competitive prices while providing good customer service.” Garber reported to the Board that open enrollment in the Plan would conclude on Dec. 15. Open enrollment meant Church of the Brethren congregations and qualifying church agencies could enroll employees regardless of each person’s health or medical history. Congregational retirees had a one-time only opportunity to enroll as well, provided they met eligibility requirements. Launching a new plan has meant a flurry of activity for BBT staff. Information packets, which outline the four CEP benefit plan designs, prescription drug benefit, and Medicare supplement plan, were sent to all ordained and licensed ministers in August. This fall Garber traveled to 21 of the 23 districts, interpreting the plan to current and prospective members. An audio-visual CD-ROM containing similar information was sent to all congregations in October. Rate quotes were sent to the 703 churches and individuals that requested them, and countless telephone inquiries have been received. In November, enrollment packets were sent to all who had requested quotes. While some members’ rates will go down as others go up, Garber said the geographic and age rating instituted by CEP should mean the Plan is competitive nationwide. “Some with higher premiums are comparing CEP with other plans, hoping to save premium costs,” said Garber. “In doing so, one must be careful to compare apples to apples, which often is not being done. For instance, does the less expensive plan carry a prescription drug benefit?” In addition to comparing benefits, such as coverage, copays, deductibles, and out-of-pocket maximums, part of the equation is comparing same-year premiums, Garber added. Had a majority of Plan members continued receiving medical insurance in 2003 through MAMSI, as they have for the past three years, those members would have experienced a 29-percent premium increase. Others, such as those in Pennsylvania who receive family coverage through Capital Blue Cross, would have experienced a 71-percent increase. “We feel good about our new plan,” Garber said. “It is our hope that Brethren will give our Plan a fair comparison of benefits and rates when considering their insurance needs.” Board approves unbundling of insurance products Beginning Jan. 1, 2004, participation in the Brethren Insurance Plans will no longer be considered a package deal. This decision by the BBT Board means Plan members will be able to participate in one or more of BBT’s medical, life, and long-term care insurances without participating in all of them. In a memo indicating support of this action, Eunice Culp, chair of Annual Conference’s Pastoral Compensation and Benefits Advisory Committee, wrote, “Recognizing the changing insurance environment, unbundling will provide more flexible options for pastors and congregations.” Other business Insurance Plans
Employee Financial Services
Brethren Pension Plan
General
|