The Roman Catholic Archdiocese of Boston Pension Plan

Transcription

1 The Roman Catholic Archdiocese of Boston Pension Plan Regional Benefits Update Meetings May/June 2012

2 Pension Plan Update 1

3 Pension Plan Status Update All accruals frozen as of January 1, 2012 Total Plan participant level reduced from about 9,900 to about 7,500 due to lump sum elections in 2011 Plan funded status is estimated at 81% funded as of April 1, 2012 $214 million in assets vs. $264 million in liabilities Resulting deficit: $50 million (down from $81.5 million in June 2009) Trustee goal, articulated June 2011: fully fund the Plan and purchase annuity contracts for all liability in the Plan in the next 20+ years. Note: An additional $110-$130 million would be required to purchase annuity contracts today. Continued review of expected investment returns/discount 2 rate

4 110.0% Funded Status Projection (Estimated) 100.0% 90.0% 92.4% 99.1% 80.0% 86.5% 81.4% 86.6% 70.0% 60.0% 50.0% 54.5% 57.7% 61.4% 65.0% 68.7% 72.6% 76.8% 40.0% Estimated Funded Percentage % discount rate and age 65 retirement assumption Estimated Funded Percentage - annuity purchase basis (discount rate increases from 3.25% to 5.40%), and age 65 retirement assump tion

5 2012 Pension Plan Contributions Employer contributions reduced from ~7% of base annual wages to ~5% of base annual wages. Methodology: Average all 12 months of invoices from calendar 2011 Apply reduction of approximately 30% to average monthly amount (i.e., difference between 7.15% and 5%) Allows for 2.15% to be contributed into 401(k) Retirement Savings Plan (or other plan set up by some separately-incorporated employers) Begins to uncouple current employee participation/compensation from contribution amounts. Why? Life expectancy continues to rise, outpacing contributions made decades in the past Potential reduction in parish staff based on chosen Pastoral Planning model (when approved) would reduce salary base and thus would reduce contributions 4

6 Pension Plan Contributions: 2013 and beyond Separately-incorporated employers (~25% of deficit): Approximately 70 open and closed locations, ~1,500 individuals Working to review data with employers and create asset and liability allocations Will use these allocations to determine deficit and then contribution plan for each location Parishes/schools/other Corporation Sole locations (~75% of deficit): Reviewing various options for paying off applicable portion of deficit Unique issues: Large pool of individuals (6,000) Majority of employees had service at more than one parish/school, sometimes simultaneously Large number of parishes/parish schools closed since 2000, with assets and liabilities not always equally reallocated to closed funding location 5

7 Pension Plan Contribution Considerations Equity: each location s contribution should reflect, to a degree, that location s contribution to the Plan s liability Ability to pay: consider what each location can pay, and reject strategies that cannot be executed Budgetability : Contributions resemble the contribution levels in place for many years of ~7% of pay (now divided into 5% for Pension, 2% for new retirement plan), levels are somewhat smooth over time, minimizing future surprises Simplicity: easy to communicate and to calculate Adequacy: expected contributions should amortize the parish/school deficit in ~10 years 6

8 Health Plan Rate Setting and Future Initiatives 7

9 Health Plan Rate Setting Process Plan is self-funded, so all claims and expenses are paid for through monthly premiums Begin reviewing Plan performance in January each year Review factors such as: Claims expense, including unusually large claims or higher utilization than expected Trend (aka expected inflation of hospital and physician billing) Changes in enrollment/recognition of average age of our population New compliance requirements (state or federal mandates) Enhancements to encourage certain utilization (Nurse Hotline, $5 co-pay at CVS MinuteClinic, Natural Family Planning benefits, etc.) 8

10 Health Plan Impact of Federal Health Care Reform Several Plan changes required as of October 1, 2010 due to federal law: Dependents up to age 26 covered, lifetime maximums eliminated Trustees decided to maintain grandfathered status, which would otherwise have required: Certain required reporting Elimination of co-pays for preventative care Inclusion of abortion and contraceptive services Recent HHS rulings indicate that many religious organizations cannot avoid adding abortion and contraceptive services to their health plans Maintenance of grandfathered status delays application of the HHS contraceptives mandate Trustees continue to monitor legal status of this issue 9

11 Health Plan Rate Setting Process Expense Portion of Budget Estimated Expense PY2012 Claims - medical and Rx 92.5% $27.5 million Sun Life and self-insurance for large claims 1.9% $550,038 Tufts Administration, Disease Management, Nurse Hotline 4.0% $1.2 million Trust administration (RCAB Benefits Office, RCAB Finance & IT, outside consulting/actuarial, legal, audit 1.6% $470,000 SUBTOTAL 100.0% $29.7 million Reserve subsidy 4.0% ($1.2 million) TOTAL 104.0% $28.3 million 10

12 Health Plan Future Strategic Considerations Medicare as Primary Payer for Small Employers (defined as less than 20 employees on payroll) for January 2013 For employees and spouses age 65+ Calculating financial impact on overall Plan Reviewing impact on premiums for employees who meet this exception Wellness Initiative Online Health Risk Assessment Other online or on-site wellness activities Possible financial incentives for participation Targeted to help increase overall health of employees, both for those with chronic conditions and those who could develop them in the future Decisions will be announced this Summer 11

13 Additional Benefit Updates 12

14 Transition Assistance Program TAP provides unemployment benefits to employees working 1,000+ hours/year in the event of an involuntary termination of employment Benefits generally mimic Massachusetts state unemployment benefits: 50% of gross weekly wages (up to maximum weekly amount set for Massachusetts unemployment program) paid for a maximum period of time (30 weeks) Benefits are considered taxable wages and are issued by Pastoral Center payroll on a bi-weekly basis Benefits paid upon submission of job search 13

15 Transition Assistance Program Started in mid-1990s as a form of social justice, and in light of exclusion of churches from Massachusetts state unemployment program Premiums were charged to all parishes, diocesan schools, cemeteries, and Chancery Premium charged was 1.5% of salary until approximately 1997 TAP was well funded (over $4 million) into mid-2000s locations paying into Plan Low unemployment rates Relatively high interest rates, even in money market/savings accounts Claims exceeded $1 million per year in FY10 and almost $950,000 in FY11. TAP fund balance was at zero as of June 30, 2011; Life/LTD refund temporarily plugged the hole 14

16 Transition Assistance Program Parish Budget Guide released with estimated TAP Premium, to be charged beginning January 2013:.75% of base wages of employees eligible for TAP (i.e., working at least 1,000 hours/year and employed for at least one year. Definition is the same as used for Life/LTD and 401(k) employer contribution). Estimated annual income from this premium is $600,000- $700,000 to start, reducing over time as salary base is smaller. Factoring in estimated claims and ongoing contributions, plus modest investment returns, this premium structure would result in a one-year reserve as of FY2021. Trustees will set TAP rate in June

17 Transition Assistance Program Smaller Parish - lower wages.75% of base wages Employee 1 $ 20, $ Employee 2 $ 22, $ Employee 3 $ 21, $ $ Larger Parish - higher wages Employee 1 $ 36, $ Employee 2 $ 49, $ Employee 3 $ 38, $ Employee 4 $ 51, $ Employee 5 $ 16, $ Employee 6 $ 33, $ $ 1,

18 Transition Assistance Program If approved, would use IOI system to calculate and remit premiums Have offered membership in TAP to related entities, based on a one-time entrance fee + a flat fee per person. One organization has joined TAP under this program; at least one other has inquired. TAP Trustees will continue to monitor contributions vs. claims run rate to determine if adjustments should be made, including reduction in rates 17

19 401(k) Plan Update Over 1,400 lay employees and priests deferring money into the Plan; over $1.5 million contributed through payroll deductions as of April 30, 2012 Approximately $10 million in Pension Plan lump sums rolled into Plan (additional $1 million rolled in from other accounts/plans) Employer core contribution aggregation ongoing through central monthly billing. Final bill for calendar 2012 will occur in January Will send priest 2% match YTD bill in July Will work to true-up contributions vs. eligible wages for all employees with 1+ year of service as of December 31, 2012 Will contribute amounts into employee accounts no later than March 31, 2013 (will communicate process and amounts to be contributed) 18

20 Open Enrollment Meetings: August/September 2012 Will work with schools to visit those who will add OE presentation hour to their in-service/back to school schedules Regional presentations on all benefit plans, combined with Wellness/Health Fairs Financial incentives for attendance Wellness activities e.g., blood pressure screening, chair massage, interactive nutrition sessions, etc. Financial health sessions TIAA-CREF and Graystone Consulting representatives will present and be available for one-on-one sessions on 401(k) accounts and retirement planning 19

21 Other Possible New Benefits Flexible Spending Accounts (health care and dependent care) Supplemental Life Insurance Vision Plan Short-Term Disability MBTA pre-tax plan Open to other ideas 20

22 Clergy Benefit Updates 21

23 Clergy Funds has a new look!

24 Upcoming Fundraising Events June Collection New Website will replace Bostonpriests.org Careforseniorpriests.org Celebration of the Priesthood Dinner

25 IOI Payroll System Update And Next Steps 24

26 Review of IOIPay Implementation 2011 Between July 2011 and January 1, 2012, nearly 400 locations implemented IOIPay Outstanding level of commitment and assistance from all locations (typical implementation for diocese our size requires 18+ months) Successful use of IOI pay data for 401(k) Plan employer contribution billing Some use of IOI pay data for Workers Compensation billing Will use IOI pay data for life/ltd refresh for October 1 (will communicate process by August) Ongoing communication about how to best use IOI via monthly calls (1 st Mon, Tues & Wed of each month, 1:00 pm) and IOI training webinars 25

27 Next Steps with IOIPay Reviewing data for legal and benefit plan compliance Hourly vs. salary; hourly rate/minimum wage; pay frequency 1099 vs. W-2 Enrollment in RCAB mandatory benefit plans (life, LTD and 401(k)) SSN Hours paid Vacation accrual and ongoing tracking Updated base salary amounts for October 1, 2012 life and LTD invoice Cleaning up missing data/data entered incorrectly EEO codes Workers Compensation Codes G/L account code default 26

28 Next Steps with IOIPay Proposed Standardization Pay cycles over time, create uniform pay cycle (biweekly) and common pay dates for all RCAB locations Rationale: Will reduce costs for 401(k) sweep, which must currently be completed weekly to ensure that deferrals are moved to TIAA-CREF as soon as practicable Will simplify reporting for various purposes Will make future transition to PSTs easier Process: Begin with parishes/schools already on bi-weekly pay, move to common pay date (likely every other Thurs or Friday), transitioning to new date by July 2013 Encourage locations with multiple pay cycles and/or weekly pay to move to bi-weekly pay, with goal of adding them to July 2013 common pay date 27

29 Next Steps with IOIPay Proposed Standardization Paid time off over time, create uniform policies for vacation pay, sick time, etc. and encourage use of these policies Rationale: Many requests for the Archdiocese policy today Will assist in evaluating total compensation for like positions Will make future transition to PSTs easier Process: Summer/Fall 2012 survey parishes on current practices Winter 2012 create report and recommended uniform policies Obtain feedback from appropriate consultative bodies regarding next steps 28

30 Next Steps with IOIPay Proposed Standardization Health/Dental deductions review current guidelines and update if needed, re-issuing guidelines targeted to specific parishes that have other contribution plans in place Rationale: Will assist in evaluating total compensation for like positions Will make future transition to PSTs easier Process: Summer/Fall 2012 review current deduction amounts and create report of results Winter 2012 review current guidelines and issue updated version Obtain feedback from various resources regarding next steps 29

31 Next Steps with IOIPay Benefit Administration Benefits enrollment/administration data was migrated to Lawson payroll system December Numerous workarounds are required to obtain correct benefits billing each month. Software for Combined Monthly Billing (CMB) is antiquated and costly to maintain/support. Benefits Office goal is to reduce headcount/level of nonstrategic support. IOIPay has partnered with Benelogic to provide benefits administration and invoicing. Uniform Payroll Focus Group continues to serve, focused on next steps with IOIPay 30

32 Next Steps with IOIPay Benefit Administration Structure of IOI/Benelogic benefits administration: Employee Self-Service portal (single sign-on with IOI ESS) Employees can review and make elections for benefit coverage will be reviewed/approved by location payroll contact Location payroll administrators can make elections for employees without access to a computer/the internet Once enrollment data from ESS is approved by location, applicable deduction amounts populate in IOIPay Over time, data held in IOI/Benelogic will be sole source of enrollment information for all employees on RCAB benefit plans 31

33 Next Steps - Benefit Administration Beta group - Benefits Office to enroll employees and dependents in all benefits through Benelogic 8/1/2012 All IOI locations - Benefits Office to send hard copy summary of enrollment data to all enrolled employees for review. 8/20/2012 Beta group - Online enrollment through Benelogic/ESS (require all enrolled EE's to log in to confirm enrollments and EE/dependent data) 8/20/2012-9/30/2012 Beta group - Begin use of IOI as benefits database (no more enrollment forms sent to Benefits Office) 9/1/2012 9/1/2012- Evaluate success/other results of Beta group 1/1/2013 All IOI locations - Begin billing 401k match and core contribution via sweep (weekly) 1/1/

34 Next Steps - Benefit Administration All other IOI locations - Benefits Office to enroll employees and dependents in all benefits through Benelogic 3/1/2013 All other IOI locations: Require all enrolled EE's to log in to Benelogic/ESS to confirm enrollments and EE/dependent data All other IOI locations - Online enrollment through Benelogic/ESS (require all enrolled EE's to log in to confirm enrollments and EE/dependent data) 5/1/2013-6/15/2013 8/20/2013-9/30/2013 All other IOI locations - Begin use of IOI as benefits database (no more enrollment forms sent to Benefits Office) 9/1/2013 Begin using IOI sweep to pull life, LTD, health and dental billing (1st payroll of the month) 10/1/2013 Begin using IOI sweep to pull work comp billing (weekly) 10/1/

35 Comments/Questions? 34

36 Contact Us Carol Gustavson, Plan Administrator, Lay Benefits (617) Maria Sullivan, Clergy Benefits (617) Joan Smith, Clergy Benefits (617) Shannon Swan, Uniform Payroll (617)