9/3/2020

1

ARE YOU GETTINGWHAT YOU DESERVE?

September 3, 2020

Kansas City DistrictLeadership Initiative

ABOUT ME

Marlton, NJ

ABOUT ME

9/3/2020

2

PBUSA (SINCE 1919)Purpose• Serve the ministerial and lay employees of USA

congregations and districts• Serve the USA congregations and districts in their

role as employersSources of Funds• P&B Fund – 2.25% of allocation base• Individual premiums and contributions• Investment earnings•Gifts

SOME HISTORY

•Church of the Nazarene founded in 1908• PBUSA origins began in 1919•General Board of Mutual Aid•General Board of Ministerial Relief

•Nazarene Ministers Benevolence Fund (1941)• Board of Pensions (1952)•Nazarene TSA Plan (1963)

9/3/2020

3

SOME HISTORY• Basic Pension Plan (for ministers) (1971)•General Church Pension Plan (1987)• Single Defined Benefit Pension Plan (1996)• Basic and General Church plans merged/closed• Retained separate benefit formulas

•Nazarene 403(b) Retirement Savings Plan (1996)• Employer Contributions (discretionary)• Annual Pension Supplements (APS)

SOME HISTORY

Directors of PBUSA• E.J. Fleming (1919 - 1947) – a minister• Helped found KC Rescue Mission (now Shelter KC)

•Mervel Lunn – a layman• Worked w/ E.J. Fleming to direct ministerial relief for the

first 37 years of the work• Manager of Nazarene Publishing House (1921 - 1948)• General Treasurer (1926 - 1945)• Executive Secretary (1940 – 1956) Dept. of Ministerial

Benevolence

SOME HISTORY

Directors of PBUSA (cont’d)• T.W. Willingham (1948 - 1960)•Dean Wessels (1960 – 1993)•Don Walter (1994 – 2019)•Kevin P. Gilmore (Oct 2019)

Organizational Structure

General Board

Global Administrationand Finance Committee

Board of Pensionsand Benefits USA

Director

General Treasurer

SOME HISTORY

Board of Pensions and Benefits USA•9 Members (clergy and laity)•1 Rep from each U.S. region•1 At Large•Elected every General Assembly•Currently 1 vacancy (clergy)

9/3/2020

4

BENEFITS YOU DESERVE

•Critical information uniquely focused to meet your needs• Basic levels of insurance and retirement

funded by the USA church• Supplemental benefit programs to assist your

local church employer• Presence/advocacy

INFORMATION YOU DESERVETaxes and compensation• Know your unique tax status• Keep church allocation payments current• Have your treasurer call us with questions

When structuring compensation know• The cost of a ministry• The cost of a minister•Memo #4 – Strategies for Structuring…

•www.pbusa.org – stay alert to changes

SOME HISTORY

• 5 versions of defined benefit retirement plans;• 2 versions of defined contribution savings plans;• 5 types of group life insurance/death benefits;• 4 types of group long-term disability benefits;• 2 health/hospitalization programs;• Several types of benevolence programs; and• Processed $53M of benefit payments in FY19

BENEFITS YOU DESERVE

• Life Insurance•Disability Insurance•Defined Benefit Plan (BPP before 1996)•Defined Contribution Plan (403b; 1996)• Employee Deferrals (you)• Employer Contributions (your church)• Annual Pension Supplement (APS) (P&B Fund)

Base APS Bonus APS Matching APS

BENEFITS YOU DESERVE

• Benefits are made possible through contributions to the P&B Fund by local churches and districts• Value of certain benefits is dependent on the

local church’s progress on annual P&B Fund goal:• Education Fund goal for APS Match

PLAN ASSETS/PARTICIPATION

Defined Benefit (Pension) Plans (as of 9/30/19)$150 million in assets / 6,200 participants

Defined Contribution Plan (403b)$550 million in assets / 14,000 participants

9/3/2020

5

SOME HISTORY•Basic Pension Plan (ministers)•No contributions required by participants

•General Church Plan (GMC staff)• 3% EE contribution required

• SDBP expends ~15% of its assets annually to meet pension obligations.•Annual Pension Supplements (APS)• Requires church contributions to P&B Fund

SOME HISTORY

• Pension benefit for ministers ($ Rate Per Mo x YOS)• Max 50 YOS (originally 40)• $.005 for every year over 10 (1989) • 403(b) APS credit offset

• Pension benefit base rate not increased since 2004• Extra payment last made in 2006• 3.54% effective annual rate of increase (1971 to 2020)• Excludes effect of “extra” one-time benefit payments

SOME HISTORY

•2008 market decline (25%)• SDBP dropped to 50% funded ratio

•2012 BGS responds w/ temporary measures:• Funding allocation changed•Non-WEF resources added• Intent to restore “as quickly as possible”•Annual review of the situation

ANNUAL PENSION FUNDING

The table to the right documents the source of calendar year funding to the SDBP over the past eight years ($ in millions).

Funding from the .25% formula allocation currently accounts for approximately $1.5 million annually from P&B Fund.

NEAR-TERM CHALLENGE

Contributions to the P&B Fund have increased in the past two years, but are part of a declining trend over the past five years.

Source: WTW for Investment Committee

9/3/2020

6

Cash Flow Projection by WTW (Oct 2019)

ANNUAL PENSION FUNDING

Fully Funded in 2037

Nazarene 403(b) Retirement Savings Plan

• Critical tax advantage for ministers housing allowance• Professional investment managers• Investment Committee

• Authorized by the General Board• Directs the investment of all funds of the General Board and its

subsidiary organizations (per approved Investment Policy)• Utilizes disinterested professional investment consultant• Meets quarterly

Nazarene 403(b) Retirement Savings Plan

• Fidelity Investments (Recordkeeper)• 27 Investment Options• Competitive Fee Structure

• Third-party review in 2019• Managed Account options• Access to Fidelity Investment Centers across the US• Digital solutions and experienced advisors available 24/7• Regulatory Compliance

9/3/2020

7

9/3/2020

8

• If your church is paying less than 50% of it’s annual P&B allocation, you are not receiving the $200 APS Base benefit you deserve.• Paying 100% adds an additional $338 APS Bonus;• Also paying 100% of Education Fund adds another $250

APS Match• The above totals to an annual APS benefit of $788!

BARRIERS TO WORKING THE PLAN

1. Open an account2. Initial contribution3. Min contrib requirem4. Select an investment5. Select a beneficiary6. Personal contributions

1. Done by P&B2. Done by P&B3. Waived by P&B4. Default fund5. Default spouse/estate6. This is on you!

TOP 7 FINANCIAL CHALLENGES OF NAZARENE PASTORS IN U.S.

• High student loan debt• Excessive consumer debt and insufficient savings• Lack of retirement readiness• Communication barriers regarding financial issues:

o clergy/spouseo clergy/lay leaders

TOP 7 FINANCIAL CHALLENGES OF NAZARENE PASTORS IN U.S.

• Need for effective strategies to teach biblical financial management in the local church• Difficulty accessing financial management tools• Insufficient training and learning opportunities

for the effective use of financial management tools

9/3/2020

9

UNFUNDED DEBT/INTEREST

usdebtclock.org as of 9/2/20 1:38 pm

REVENUES / GDP

usdebtclock.org as of 9/2/20 1:38 pm

US NATIONAL DEBT

usdebtclock.org as of 9/2/20 1:38 pm

WILL I EVER HAVE ENOUGH?

• Will I ever have enough?• Will it continue to be enough?• How much is enough, particularly in view of

my Christian convictions and understanding of Scriptures?

9/3/2020

10

WILL I EVER HAVE ENOUGH?• Will I ever have enough?• Will it continue to be enough?• How much is enough, particularly in view of my Christian

convictions and understanding of Scriptures?

Planning one’s finances must take place under the sovereignty of God, recognizing His omnipotence, wisdom, purposes, and plans.

WILL I EVER HAVE ENOUGH?

God is more interested in each of us individually than He is in any failure or success of our economic system.

God is interested in how we glorify Him whereverwe live – whether under capitalism, communism, socialism, or any other system.

FOUR BIBLICAL PRINCIPLES OF MONEY MANAGEMENT

“Success is the continued achievement of being the person God wants me to be, and the continued achievement of established goals God helps me to set.”

~ William CookSuccess, Motivation, and the Scriptures

FOUR BIBLICAL PRINCIPLES OF MONEY MANAGEMENT

• God owns it all• We are in a growth process• The amount is not important• Faith requires action

GOD OWNS IT ALL• God has the right to whatever He

wants, whenever He wants it.• Every spending decision is a spiritual

decision. Someday there will be an

accounting for it• You can’t fake stewardship

Your checkbook tells the story

WE ARE IN A GROWTH PROCESS

• God uses money and material possessions in our earthly lives as a:• Tool• Test• Testimony

9/3/2020

11

WE ARE IN A GROWTH PROCESS

• We need to discover what God would have us learn from abundance or scarcity, or anywhere in-between.

• God is not trying to frustrate us. He is trying to get our attention, and money is a great attention-getter.

“If a person gets his attitude toward money straight, it will help straighten out almost every other area of his life.”

~ Billy Graham

WE ARE IN A GROWTH PROCESS

• Rest and revel in His answered prayer over financial matters; just don’t let resentment creep in when things don’t go your way in human terms.

• Growth is a process, not a once-and-for-all.

THE AMOUNT IS NOT IMPORTANT

• God neither condemns wealth nor commends poverty, or vice versa. “…camel … eye of a needle”?

• Whatever He chooses to entrust you with, hold with an open hand.

FAITH REQUIRES ACTION

• Many of us know what we ought to do, but we disobey or delay.

• To delay is to disobey; it is not “active faith”

• It is not our job to tell the Master what to do with His resources; it is only our job to be faithful to use what we have been given.

STEWARDSHIP

Stewardship is the use of God-given resources (time, talent, treasure, truth, relationships, etc.) for the accomplishment of God-given goals.

This definition is active, not theoretical.

9/3/2020

12

FINANCIAL PLANNING

“Make all you can, save all you can, give all you can.”

~ John Wesley

FINANCIAL PLANNING

There is never enough money to do or buy everything we want. There are always more ways to spend money than there is money available.

Good decision-making requires a long-term perspective.

FINANCIAL PLANNING

• All of us have limited resources.• Always more “uses” for money than money

available.• Today’s decisions determine destiny. (A

dollar spent is gone forever and can never be used in the future for anything else.)

• The longer term the perspective, the better potential for wise decisions.

FINANCIAL PLANNING

The problem is that most of us are “responders” rather than “planners.”

Financial planning is allocating limited financial resources among unlimited alternatives.

WHAT SHOULD YOU DO?

1. Forgive yourself for the past; look forward2. Pray for wisdom (James 1:5-6)3. Get educated4. Make a plan5. Ask for help6. Get started… or start again7. Use the resources available to you

9/3/2020

13

PRAY FOR WISDOM ANDEXPECT RESULTS

5 If any of you lacks wisdom, you should ask God, who gives generously to all without finding fault, and it will be given to you. 6 But when you ask, you must believe and not doubt…

James 1:5-6 NIV