Servant of the Church

As administrator of plan benefits for The United Methodist Church, Wespath Benefits and Investments[1] (Wespath) is responsible for investing plan assets and sustaining benefit payments long into the future. Wespath has been caring for those who serve since 1908—sixty years before this church was “United.” We intend to continue caring for those who serve for generations to come—by making whatever adjustments are necessary to pension plan design, administration, and investments in our role as a prudent fiduciary of the church.

Our mission of caring for those who serve is rooted in the earliest days of Methodism, with the Easter offering in 1774 for “preachers in want.” The first formalized support for itinerant ministers was the Preacher’s Fund—created in 1784 for “worn-out preachers, widows and children,” and based on John Wesley’s guidance. Wespath’s history as a general agency started with the General Conference 1908 authorization to create the Board of Conference Claimants, a denomination-wide agency to help support retired clergy and their families.

Adapting to Changes

Over the span of more than two hundred years, benefits for retired clergy and their families have adapted to meet changing times and needs.

Today our pension plans are at a crossroads—not only because of the impending vote by General Conference 2019 and its potential impact on the future of the church, but also because of demographic trends that have nothing to do with the special General Conference. Trends such as declining membership in US churches, decreasing numbers of ordained elders, and increasing part-time local pastors and lay ministers also drive long-term plan design considerations.

Reviewing plan designs periodically is a normal course of business. From time to time, Wespath’s board of directors recommends changes to address denominational, demographic, and economic factors. Proposed changes are subject to General Conference approval, so we are typically planning at least a quadrennium ahead. In weighing long-term sustainability of retirement benefits, we are looking ten, twenty, and even fifty years into the future.

Our church faces uncertain times in the near future. What remains certain is Wespath’s commitment to securing benefits over the long haul for United Methodist clergy and other plan beneficiaries.

Managing through a Changing Church Structure

While none of us can accurately predict the outcome of General Conference 2019 and its aftermath, many of us have closely followed the work of the Commission on a Way Forward. We have contemplated the Commission’s proposals and considered how potential rearrangement or avenues for exit of clergy, churches, or annual conferences might impact UMC structure—and specifically pensions.

As part of their thoughtful discernment process, both the Commission and the Council of Bishops asked Wespath for analyses to help them better understand how restructure scenarios could impact pension benefits, funding, and administration. Wespath has been in discussion with both groups regarding the impact on individual clergy benefits, local church contributions, and annual conferences’ financial liabilities. Wespath formed a scenario planning team to study restructure consequences in depth.

Notwithstanding potential changes in the church, Wespath is focused on assuring that the plans we manage for clergy and the funds we invest are sustainable.

However, while benefits for retired clergy are secured—and accrued benefits for active clergy also are secured—we believe that pension plan designs must be modified toward a more account-based design to protect the long-term viability of benefits for future generations of clergy.

Church restructure scenarios could accelerate the need to modify pension plan designs for a long-term outlook; however, restructure in itself would not create this need.

Understanding Your Pension Plan

Each clergyperson has a unique combination of benefits based on one’s specific years of service and the plan designs in place at that time of service. Most active clergy now also contribute to their own retirement savings, and thus are more engaged than prior generations in assuring their personal financial readiness for retirement.

However, annual conferences ultimately assume responsibility for paying benefits promised to retirees. Annual conferences and local churches (through the conference) fund the lion’s share of retirement benefits. As we think about any future church changes, this responsibility of benefit payments is one of many questions that Wespath is reviewing. Specifically, we are examining what would happen to funding if a local church leaves The UMC.

The connectional nature of our denomination means that departure by one church affects others. Churches that leave The UMC should be responsible for paying “their fair share” of pension funding, as part of the annual conference’s aggregate unfunded pension liability.

Case Study—Past Informs Future

Keeping track of service records, itineracies, and funding for each clergyperson’s unique benefits profile is challenging as is. Add in potential realignment of conferences or exits of churches, and “challenging” expands to “extremely complicated.”

The 2010 merger of four conferences into the Upper New York, Susquehanna, and New England annual conferences offers a case in point when thinking about UMC restructure. This merger required carefully tracking and reallocating pension obligations from more than 1,200 churches, and appropriately correlating with individual clergy. Wespath spent two years and seven thousand labor hours on facilitating the pension-related administrative requirements for this merger.

Fulfilling Our Mission—for Generations to Come

Regardless of the GC2019 outcome, Wespath remains committed to our mission: caring for those who serve by providing investment and benefit services that honor the mission and principles of The United Methodist Church. We are planning for the long-term sustainability of your benefits, and those of generations to come, as we look to plan designs that are increasingly account-based and portable.

Through our scenario planning and over one hundred years of serving the church, Wespath is well-positioned to continue fulfilling our mission well into the future. We have carried on through times of change, challenge, and divisiveness in the past. Our commitment to those who serve won’t waiver, even amid the church’s current storms.