November 17, 2010

CHICAGO – The Church Council of the Evangelical Lutheran Church in America (ELCA) authorized one-time payments from the ELCA Special Needs Retirement Fund "as soon as realistically possible in 2011" to help people most adversely affected by reductions in ELCA Board of Pensions annuity payments caused by the crisis in financial markets in late 2008 and early 2009.

The council action was among a series of recommendations it approved from a report presented by an Ad Hoc Committee the council appointed in August.

The Church Council is the ELCA's board of directors and serves as the legislative authority of the church between churchwide assemblies. The council met here Nov. 12-14. Assemblies are held every other year; the next is Aug. 14-20, 2011, in Orlando, Fla.

The Board of Pensions is a separately incorporated, self-supporting ministry of the ELCA, based in Minneapolis.

In addition the council asked the Board of Pensions and the management committee of the ELCA Special Needs Retirement Fund to "develop criteria based on need and a process for distribution of available funds" to those with the greatest need. It asked for more frequent reviews of eligibility, including periodic comprehensive reviews to address plan members' needs in light of economic realities, and requested more information about the implementation of the recommendations at the council's April 2011 meeting.

In 2009 the ELCA Board of Pensions informed about 12,500 plan members receiving benefits from the Participating Annuity and Bridge Fund that it planned to reduce annuity payments annually over a three-year period. The fund suffered significant losses due to the financial downturn in late 2008 and early 2009, necessitating the reductions.

Trustees of the Board of Pensions reduced annuity payments for 2010 by 9 percent and set the interest crediting rate for bridge accounts at -3.5 percent. On Nov. 7 they agreed to smaller reductions in 2011 because of stronger market performance, especially in the past two months. Trustees reduced 2011 annuity payments by 6 percent and set the interest crediting rate at -0.3 percent for bridge accounts.

In response to resolutions from nine synods, the council formed the Ad Hoc Committee in August to consult with the Board of Pensions to learn more about the decisions it made regarding the annuity and bridge fund. It asked the committee to explore ways to restore fund losses, increase payments to annuitants and explore ways to mitigate the adverse effects of fund losses.

John G. Kapanke, president of the ELCA Board of Pensions, thanked the council for approving the Ad Hoc Committee's recommendations. The actions, he said, "will help restore trust and confidence" in the Board of Pensions and its Participating Annuity and Bridge Fund.

The Rev. Robert D. Berg, Board of Pensions assistant to the president for church relations, said Special Needs Retirement Fund assets are available to accomplish the one-time payment referenced in the Church Council action. The payments won't jeopardize the ongoing program for those already receiving assistance from the Special Needs Retirement Fund, Berg said. Presently, 47 plan members, including single people and married couples, are benefiting from the fund, he said.

The 1993 Churchwide Assembly created a program to assist ELCA Board of Pensions' plan members, including annuitants, who have special needs due to economic distress, according to background materials provided to the council. The Special Needs Retirement Fund was established and the council provided $500,000 in designated funds, and the Board of Pensions has since contributed undesignated gifts to the fund. The council's designated funds and the Board of Pensions' contributions were identified in the council action as sources for the one-time payments. A managing committee of the ELCA churchwide organization and the ELCA Board of Pensions oversees the Special Needs Retirement Fund.

The Ad Hoc Committee concluded in its evaluation that:

• the ELCA Board of Pensions "acted reasonably and promptly and consistent with its obligations" in the actions it took regarding the Participating Annuity and Bridge Fund

• the Special Needs Retirement Fund "represents the most reasonable and appropriate mechanism and the only realistic source of funds within the ELCA to assist those most profoundly impacted by annuity reductions"

The committee worked with ELCA Research and Evaluation to prepare a questionnaire sent to 1,500 annuitants who are still responding, with results to be evaluated, the council was told.

In addition to authorizing one-time payments from the Special Needs Retirement Fund and asking for more frequent reviews of eligibility, the council asked the Ad Hoc Committee to continue its work and monitor implementation of recommendations. It asked the committee "to bring a report and possible recommendations" to the April 2011 council meeting.

The council made specific requests of the ELCA Board of Pensions. It asked that it enhance communication to annuitants and prospective annuitants about the ELCA Participating Annuity and Bridge Fund, and any new annuity products. It asked the Board of Pensions to:

• consider developing a fund to provide payments to plan members in "extraordinary economic distress"

• enhance communication regarding the Special Needs Retirement Fund

• explore possibilities for regular voluntary contributions by sponsors and plan members to the fund as well as other options for providing special gifts

• make recommendations to the council if needed

The council also suggested the Board of Pensions consider amending its name "to reflect that it is providing retirement income through annuity payments and investment fund(s) distributions, not providing pension payments, and to reflect more accurately the other services it provides."

ELCA News Service