Caring For Those Who Serve U.M. Benefits Review (with General Conference changes) Missouri Annual Conference August 9, 2013 August 9, 2013 Presented by: Mark Conner

Agenda Retirement provisions (unchanged) Retirement provisions (unchanged) CPP (death & disability) eff CPP (death & disability) eff General Board retirement plans eff General Board retirement plans eff Services: Services: LifeStage Investment Service LifeStage Investment Service LifeStage Retirement Income Service (new) LifeStage Retirement Income Service (new) Ernst & Young Financial Planning Service Ernst & Young Financial Planning Service

Provisions for Retirement The Book of Discipline ¶358 Normal retirement Normal retirement  Age 65 or 40 years of service Early retirement Early retirement  Age 62 or 30 years of service Mandatory retirement Mandatory retirement  Age 72

Comprehensive Protection Plan Death and Disability

Comprehensive Protection Plan Death and disability benefits Death and disability benefits  Active  Retiree Educational benefits for surviving children Educational benefits for surviving children Eligibility requirements Eligibility requirements  Full-time: Compensation  Others by conference elective arrangements

Denominational Average Compensation (DAC) Average plan compensation of United Methodist clergy serving full-time appointments Average plan compensation of United Methodist clergy serving full-time appointments  2013: $63,867  2014: $65,186  2015: $66,259

Plan Compensation $40,000 = Total $ 8,000 + Parsonage: (25%) + Housing allowance OR $ 5, /403(b) reduction: $27,000 Taxable cash salary: Taxable cash salary:

Long-Term Disability Plan Benefits Definition Unable to perform duties due to injury or illness for at least 6 continuous months Unable to perform duties due to injury or illness for at least 6 continuous months Disability Amount  70% of pre-disability plan compensation (housing + cash salary)  Plan compensation not to exceed 200% of the DAC  Minimum benefit amount equal to 40% of the DAC

Disability Benefit Changes Return-to-work incentives Return-to-work incentives Mental-nervous benefit limitation Mental-nervous benefit limitation Benefit duration schedule after age 62 Benefit duration schedule after age 62

Post Incapacity Earnings – G C changes Monthly benefit can go below 40% DAC due to other income offset Provision CPP Current Benefit 2013 Change Before 24 months of disability Offset applied after claimant “earns” 100% of pre-disability compensation Offset applied after claimant “earns” 100% of pre-disability compensation No change No change After 24 months of disability $1 for $1 offset applied immediately $1 for $1 offset applied immediately $.50 for $1 offset applied immediately, up to 100% of pre- disability compensation $.50 for $1 offset applied immediately, up to 100% of pre- disability compensation

Return-to-Work, GC changes CPP Current Process 2013 Change Voluntary; for claimants on disability less than 24 months For claimants (with doctor’s release) before and after 24 months For claimants (with doctor’s release) before and after 24 months Participant disincentive (benefit reduction for refusal) Participant disincentive (benefit reduction for refusal) Conference incentive (grant) Conference incentive (grant)

New Benefit Duration Schedule Benefit duration schedule* aligned with Social Security Normal Retirement Age * Cases of mental nervous limitation: lesser of maximum duration or 24 months Age at DisabilityBenefit Duration* Less than age 62To Social Security retirement age Age 6260 months Age 6348 months Age 6442 months Age 6536 months Age 6630 months Age 6724 months Age 6818 months Age 69 and above12 months or age 72, whichever is earlier

CPP Death Benefits 2013 (Active) Active:$50,000 Spouse:20% of DAC ($12,773) Surviving spouse:15% of DAC ($ 9,580) Child:10% of DAC ($ 6,387)

CPP Eligibility Retiree death benefit eligibility rules Effective January 1, 2013 Effective January 1, 2013  25 years of service or,  At least 12 of 15 years immediately prior, phasing in  2013, 6 0f 10  2014, 7 of 10, etc.  2019,12 of 15

CPP Retiree Death Benefits 2013 Retired Participant: $20,000 Spouse: $15,000 Surviving spouse: $10,000 Child: $ 8,000

Beneficiary Designation Beneficiary designations are required for retirement and welfare plans, and supersede will provisions Beneficiary designations are required for retirement and welfare plans, and supersede will provisions Update at times of change Update at times of change  Birth or adoption of a child, marriage, divorce or death Can make separate designations for CRSP *, UMPIP and CPP Can make separate designations for CRSP *, UMPIP and CPP * CRSP covers the MPP account (before set-up) as well

General Board Retirement Plans Clergy Retirement Security Program (CRSP) CRSP Ministerial Pension Plan (MPP) Pre-82 Plan (Ministerial Reserve Pension Fund) United Methodist Personal Investment Plan (UMPIP) CRSP

Clergy Retirement Security Program + Defined Benefit (DB) Defined Contribution (DC)

Part-Time Service for the DB Component CRSP not available to 25% appt’s CRSP not available to 25% appt’s  Missouri (New 2014) recommendation for local church contribution to UMPIP Credited service based on appointment percentage (75% or 50%) and... Credited service based on appointment percentage (75% or 50%) and... Adjusted if only a portion of a full year served Adjusted if only a portion of a full year served

CRSP Credited Service Example for the DB Component CRSP Credited Service Example for the DB Component CRSP credited service example: 01/01/07 – 06/30/08First UMC100%1.5 07/01/ /30/08Wesley100%.25 10/01/ /30/09Pastoral 0%0.00 Counselor 07/01/ /30/10Highland 50%.50 07/01/ /31/10Christ50%.25 Total CRSP-DB credit2.50 PeriodChurchAppt. %Credit

CRSP Defined Benefit Component― Service Before 2014 Monthly payment, 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, 2007 until December 31, 2013 Example for 2020 retirement.0125 x $80,000 (hypothetical DAC) x 7 years = $7500 ÷ 12 = $625 per month

Monthly payment, payable for life, calculated by multiplying the following and then dividing by 12 : 1.0% DAC at time of retirement Years of credited service after January 1, 2014 Example for 2020 retirement.01 x $80,000 (hypothetical DAC) x 7.5 years = $6,000 ÷ 12 = $ 500 per month CRSP Defined Benefit Component― After 2013

2020 retirement Total benefit= = $1,125 per month  Initial dollar amount of the benefit will be reduced to offset the value of spousal coverage. (credit > 2014)  Choice of cost-of-living increase  Reduction for early retirement CRSP Defined Benefit Component Example: 2007 to 2020

CRSP Formula Benefit Actuarial reduction for early retirement: ½ % for each month or fraction of a month retirement begins in advance of normal retirement Age 63 ½ with less than 38 years of service One and ½ years from full retirement ½ % per month for 18 months = 9 % reduction Example:

CRSP Defined Benefit Benefit automatically increases by 2% each year after retirement Benefit automatically increases by 2% each year after retirement Alternative survivor option and cost-of-living increases available at retirement Alternative survivor option and cost-of-living increases available at retirement Surviving spouse benefit equal to 70% of deceased participant’s credited years benefit for Surviving spouse benefit equal to 70% of deceased participant’s credited years benefit for For credited years starting 2014, retiring participant can elect surviving spouse benefit option For credited years starting 2014, retiring participant can elect surviving spouse benefit option

Defined Contribution Component Contribution equal to 3% annually based on plan compensation Contribution equal to 3% annually based on plan compensation Matching starting January 1, 2014 (2% contribution plus 1% match if participant contributes at least 1% to UMPIP) Matching starting January 1, 2014 (2% contribution plus 1% match if participant contributes at least 1% to UMPIP) Account balance invested as directed by the participant Account balance invested as directed by the participant Available as a cash distribution (partial, full or cash installments) Available as a cash distribution (partial, full or cash installments) Remaining balance to beneficiary at death Remaining balance to beneficiary at death

CRSP: DC Component 2% Non-match 1% Match* CRSP DC 3% Non-match CRSP DC 3% Non-match Effective January 1, 2014 * 100% of UMPIP contributions up to 1% of compensation Effective thru December 31, 2013

Matching Contributions Participant Before-Tax/ After-Tax Contributions 2% Non-Match 1% Match CRSP DC UMPIP

UMPIP Sources Before-tax contributions Before-tax contributions After-tax contributions After-tax contributions Rollovers Rollovers  401(a)  401(k)  403(b)  IRA (traditional)

Updating Your Monthly Contribution Before-Tax and After-Tax Contributions Agreement Before-Tax and After-Tax Contributions Agreement Percentage or dollar amount Percentage or dollar amount Can increase or decrease throughout the year Can increase or decrease throughout the year

2013 Elective Contribution Limits 402(g): $17,500 Catch-up (age 50+):$5, (c) lesser of includable compensation or $51,000* * See IRS Publication 571 regarding 15-year rule

Before-Tax or After-Tax Contributions Before-Tax No federal income tax (currently)No federal income tax (currently) No SECA (Social Security)No SECA (Social Security) After-Tax Pay federal income taxPay federal income tax Pay SECA (Social Security)Pay SECA (Social Security)

UMPIP Access In-service withdrawals In-service withdrawals  Age 59½ Hardship loans Hardship loans Hardship withdrawals Hardship withdrawals Disability Disability Termination Termination Retirement Retirement

United Methodist Personal Investment Plan Distributions Benefit choices Benefit choices  Full lump sum  Partial lump sum  Cash installments  Leave on account Must begin to take distributions later of: Must begin to take distributions later of: Retirement (age 72 on/before July1) Retirement (age 72 on/before July1) April 1 following attainment of age April 1 following attainment of age 70½ Sign up for LifeStage Retirement Income Sign up for LifeStage Retirement Income Use “Benefits Access” Use “Benefits Access”

LifeStage Retirement Income Converts defined contribution account balances into monthly income Converts defined contribution account balances into monthly income Adjusts payments annually for inflation Adjusts payments annually for inflation Keeps payments within the “payment safety zone” Keeps payments within the “payment safety zone” Offers excellent probability of lifetime income, but no guarantee Offers excellent probability of lifetime income, but no guarantee

Advantages of LifeStage Retirement Income Alternative for non-annuitized MPP balance Alternative for non-annuitized MPP balance  Annuitization limited to 65% of MPP account after December 31, 2013 Counters retirement tendency to overspend or underspend Counters retirement tendency to overspend or underspend Balance is left to beneficiaries Balance is left to beneficiaries Participants may opt out at any time Participants may opt out at any time Investments managed by LifeStage Investments managed by LifeStage

LifeStage Retirement Income Annual Process Annual adjustment calculated each November & reflected in January payment Annual adjustment calculated each November & reflected in January payment Participant receives letter detailing change in payment Participant receives letter detailing change in payment Payments are generally expected to increase—but a decrease is possible Payments are generally expected to increase—but a decrease is possible Payment Safety Zone $758 / month

LifeStage Retirement Income

Enrollment—Consolidate

Enrollment—Set Aside Money

Benefits Access Enhancements LifeStage “Do It Yourself” installment payment tool

General Board Retirement Plans Clergy Retirement Security Program (CRSP) 2007+CRSP Ministerial Pension Plan (MPP) Pre-82 Plan (Ministerial Reserve Pension Fund) United Methodist Personal Investment Plan (UMPIP)

New Lifetime MPP Options: Effective *** Exactly 35% of balance must be: Exactly 35% of balance must be:  Rolled over to UMPIP or other retirement plan  Taken as a cash distribution  Left on account until age 70½ or retirement (whichever is later)  Once rolled over to UMPIP, LifeStage Retirement Income Service is available *** Choices made AT retirement (or delayed til 70 ½ with required beginning date

MPP Distribution Options: Life with Survivor Annuities Life with 100%$1,120$1,120 Life with 85%$1,223$1,039 Life with 70%$1,325$ 927 Life with 50% N/AN/A Samples: Payable to Contingent Annuity TypePayable to YouAnnuitant

MPP Distribution Options: Life Annuities Annuity TypePayable to You Annuity Type Payable to You Life with 10-year certain$1,699 Life with 5-year certain$1,746 Life only$1,760 Samples:

Benefits Access Find current account information Find current account information Tools Tools  Readiness  Retirement projection Investment information Investment information Beneficiary designations Beneficiary designations Resources on finances and retirement Resources on finances and retirement

Social security CRSP DB MPP UMPIP CRSP DC Pre’82

Social security CRSP DB MPP UMPIP CRSP DC Pre’82

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