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Those Reaching Middle Age of their Ministry Mississippi Conference August 16, 2010. Presented by: Ron Coleman. 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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slide1

Those Reaching Middle Age of their Ministry

Mississippi Conference

August 16, 2010

Presented by:

Ron Coleman

on the road to retirement
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
on the road to retirement1
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
overview
Overview
  • Retirement Provisions
  • Retirement Plans
  • LifeStage Investment Management Service (LifeStage)
  • Comprehensive Protection Plan (CPP)
  • Ernst & Young Financial Planning Services
  • Pension Projections
denominational average compensation dac
Denominational Average Compensation (DAC)
  • Average plan compensation of United Methodist clergy serving full-time appointments
  • 2010: $60,341
  • 2011: $61,716
conference average compensation cac
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
provisions for retirement the book of discipline 358
Provisions for RetirementThe Book of Discipline ¶358

Normal Retirement

• Age 65 or 40 years of service

Mandatory retirement

• Age 72—effective January 1, 2009

Early Retirement

• Age 62 or 30 years of service—effective January 1, 2009

20-Year Retirement

retirement plans
Retirement Plans

Clergy Retirement Security Program (CRSP)

Pre-82 Plan(Ministerial Reserve Pension Fund)

1982-2006Ministerial Pension Plan (MPP)

2007+

CRSP

United Methodist Personal Investment Plan (UMPIP)

slide9

Pre-1982 Benefit

  • 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 82 benefit paid for life
Pre–82: Benefit Paid for Life

Single participant

• Single-life, no refund

• Benefit ceases upon participant’s death

Married participants

•Life with 75 % to surviving spouse (spouse at time of retirement)

retirement plans1
Retirement Plans

Clergy Retirement Security Program (CRSP)

Pre-82 Plan(Ministerial Reserve Pension Fund)

1982-2006Ministerial Pension Plan (MPP)

2007+

CRSP

United Methodist Personal Investment Plan (UMPIP)

ministerial pension plan 1982 2006
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
annuity

Reverend John Smith1234 Nowhere StreetChicago, Illinois 12345

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)
retirement distributions mpp post 1981
Retirement Distributions:MPP (Post-1981)
  • 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 plans2
Retirement Plans

Clergy Retirement Security Program (CRSP)

Pre-82 Plan(Ministerial Reserve Pension Fund)

1982-2006Ministerial Pension Plan (MPP)

2007+

CRSP

United Methodist Personal Investment Plan (UMPIP)

clergy retirement security program crsp
Clergy Retirement Security Program (CRSP)

A new retirementplan, effective January 1, 2007 providing a core benefit at retirement with two components

clergy retirement security program
Clergy Retirement Security Program

Security

Choice/Flexibility

+

Defined Benefit(DB)

Defined Contribution(DC)

defined benefit component
Defined Benefit Component

Monthly 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, 2007

Example for 2013 retirement

.0125 x $65,000 (hypothetical DAC) x 6.5 years= $5,281 ÷ 12 = $440 per month

defined contribution component
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)
retirement plans3
Retirement Plans

Clergy Retirement Security Program (CRSP)

Pre-82 Plan(Ministerial Reserve Pension Fund)

1982-2006Ministerial Pension Plan (MPP)

2007+

CRSP

United Methodist Personal Investment Plan (UMPIP)

umpip sources
UMPIP Sources
  • Before-tax contributions
  • After-tax contributions
  • Rollovers
    • 401(a)
    • 401(k)
    • 403(b)
    • IRA
umpip access
UMPIP Access
  • In-service withdrawals
    • Age 59½
  • Hardship loans
  • Hardship withdrawals
  • Disability
  • Termination
  • Retirement
slide23

UMPIP

  • 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
advantages of investing through the general board
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
investment options

IEF

USEF

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

MAF

Risk

FIF

IPF

SVF

Return Potential

Investment Options
umpip unitized funds expense ratio comparison
UMPIP Unitized FundsExpense Ratio Comparison

3.00

413

Foreign Stock

Funds

753

Funds with

Balanced

Objective

1,417

Growth and

Income

Funds

1,773

Multi-Asset

Class Funds

1,151

Short,

Intermediate,

And Long-Term

Bond Funds

2.50

119

Inflation

Protection

Funds

238

Short-Term

Bond Funds

2.00

1.50

1.00

0.87

0.80

0.70

0.50

0.49

0.49

0.42

0.37

0.00

SVF

IPF

FIF

BSVP

MAF

USEF

IEF

Source: Wilshire Compass and Lipper as of 03/31/09

general board competitive returns year to date july 23 2010

1.8%

SVF

IPF

FIF

MAF

BSVPF

USEF

IEF

General Board Competitive ReturnsYear-to-date July 23, 2010

2.6%

5.9%

2.0%

1.4%

1.4%

-1.6%

lifestage investment management service lifestage
LifeStage Investment Management Service (LifeStage)

LifeStage Investment Management Service (LifeStage)—managed accounts

lifestage
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:

slide30

Target Fund Allocation

Risk Tolerance

Age

GBOPHB

Account Balances

Age at Retirement

▪ Fixed Income Fund

▪ Inflation Protection Fund

▪ U. S. Equity Fund

▪ International Equity Fund

▪ Stable Value Fund

Social Security Eligibility

Value of Social Security Benefits

LifeStage: Fund Selection Feature

slide31

Before Actual Fund Allocations

After Actual Fund Allocations

14%

13%

13%

13%

29%

27%

26%

34%

17%

14%

▪ Fixed Income Fund

▪ Inflation Protection Fund

▪ U. S. Equity Fund

▪ International Equity Fund

▪ Stable Value Fund

▪ Fixed Income Fund

▪ Inflation Protection Fund

▪ U. S. Equity Fund

▪ International Equity Fund

▪ Stable Value Fund

No participant intervention required

LifeStage: Rebalancing Feature

lifestage1
MPP x

CRSP 3% x

UMPIP—personal contributions x

LifeStage

Optional Required

comprehensive protection plan
Comprehensive Protection Plan

Death and Disability

cpp retirement eligibility
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

cpp death benefits 2010
CPP Death Benefits 2010

Active: $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)

ernst young financial planning services
Ernst & Young Financial Planning Services

Financial Planning

1-800-360-2539

consultation topics
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
slide41

1-800-851-2201

www.gbophb.org

hebrews 11 7
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….”