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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Clergy Retirement Security Program

Defined Benefit

(DB)

Defined Contribution

(DC)

+

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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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LifeStage

MPP x

CRSP 3% x

UMPIP—personal contributions x

OptionalRequired

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Comprehensive Protection Plan

Death and Disability

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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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Ernst & Young Financial Planning Services

Financial Planning

1-800-360-2539

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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

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www.gbophb.org

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1-800-851-2201www.gbophb.org

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Hebrews 11:7

“ By faith Noah, being warned by God concerning events as yet unseen, took heed and constructed an ark for the saving of his household….”