MPP Annuity Actuarial Valuation for 2010

Transcription

1 Revised Issued February 26, 2010 MPP Annuity Actuarial Valuation for 2010 As of January 1, 2008 Caring For Those Who Serve General Board of Pension and Health Benefits Issued: February

2 REVISED Actuarial Valuation of from Supplement Three to the Clergy Retirement Security Program This revised report reflects the 2010 conference structure for the Susquehanna, New England and Upper New York Conferences. The General Board of Pension and Health Benefits, Incorporated in Illinois, administers the Ministerial Pension Plan (MPP), including annuities provided by the plan. MPP is formally known as Supplement Three to the Clergy Retirement Security Program. By General Conference mandate, from 1982 through 2006, MPP covered all U.S. United Methodist clergy (except deacons) appointed within annual conferences or to general agencies. In addition, MPP covered deacons and clergy appointed to other extension ministries when the salary-paying unit elected to sponsor MPP. This actuarial valuation is prepared for plan sponsors (annual conferences, general agencies, and other extension ministry employers). The various plan sponsors are named in the Funding Liabilities by Plan Sponsor section of this report. It is performed based on participant and financial data as shown on the General Board of Pension and Health Benefits records as of January 1, This valuation as of January 1, 2008, is for In other words, if a contribution were due, it would be due in The General Board of Pension and Health Benefits, Incorporated in Illinois, is a separately and independent entity from the annual conferences, general agencies, and other extension ministry employers. The relationship between our organizations within or to The United Methodist does not impair our objectivity. The undersigned actuaries believe this actuarial valuation to be consistent with Actuarial Standards of Practice. GENERAL BOARD OF PENSION AND HEALTH BENEFITS OF THE UNITED METHODIST CHURCH Lisa A. Schilling F.S.A., F.C.A., E.A., M.A.A.A. Jeanne M. Featherstone F.C.A., E.A., M.A.A.A. Issued February 26, 2010 General Board of Pension and Health Benefits Issued: February

3 REVISED Explanation Concerning Revised Reports The Northeast Jurisdiction is experiencing conference boundary changes in New conferences will be formed and some conferences will no longer exist. The six conferences involved in the boundary change will reflect the following: Central Pennsylvania: will become a new conference known as the Susquehanna Conference. New England: will be restructured to include Vermont congregations from the Troy Conference. North Central New York: in its entirety will become a part of the new Upper New York Conference. Troy: Congregations located in Vermont will merge into the New England Conference; congregations located in New York will become part of the Upper New York Conference. Western New York: in its entirety will become a part of the new Upper New York Conference. Wyoming: Congregations located in Pennsylvania will become part of the new Susquehanna Conference; congregations located in New York will become part of the new Upper New York Conference. The boundary changes and restructuring are summarized below. Former Conferences New Conferences Central Pennsylvania Susquehanna Wyoming Western New York Upper New York North Central New York Troy New England New England The original actuarial valuation report reflects the six conferences as they exist prior to the boundary changes in This revised report reflects the new conference boundaries effective in General Board of Pension and Health Benefits Issued: February

4 REVISED Funding Liabilities by Plan Sponsor Total Current Liability % of Total Liability Total Current Liability % of Total Liability U.S. Annual Conference U.S. Annual Conference Alabama-West Florida 28,135, % North Indiana 35,372, % Alaska (AUMC) 1,105, % North Texas 18,758, % Arkansas 24,345, % Northern Illinois 29,026, % Baltimore-Washington 44,612, % Northwest Texas 10,428, % California-Nevada 31,102, % Oklahoma 36,525, % California-Pacific 38,258, % Okl. Indian Miss'y 2,753, % Central Texas 17,950, % Oregon-Idaho 14,274, % Dakotas 13,332, % Pacific Northwest 18,950, % Desert Southwest 10,427, % Peninsula-Delaware 16,048, % Detroit 32,911, % Puerto Rico 3,541, % East Ohio 45,498, % Red Bird Missionary 723, % Eastern Pennsylvania 27,004, % Rio Grande 6,686, % Florida 66,797, % Rocky Mountain 18,302, % Greater New Jersey 30,953, % South Carolina 48,561, % Holston 36,046, % South Georgia 27,589, % Illinois Great Rivers 42,554, % South Indiana 29,283, % Iowa 42,084, % Southwest Texas 19,454, % Kansas East 15,593, % Susquehanna 40,828, % Kansas West 18,333, % Tennessee 25,495, % Kentucky 28,021, % Texas 49,347, % Louisiana 20,401, % Upper New York 49,761, % Memphis 20,394, % Virginia 62,507, % Minnesota 24,857, % West Michigan 25,332, % Mississippi 36,038, % West Ohio 64,193, % Missouri 40,840, % West Virginia 37,068, % Nebraska 18,223, % Western North Carolina 54,407, % New England 41,560, % Western Pennsylvania 51,189, % New Mexico 12,653, % Wisconsin 28,227, % New York 32,289, % Yellowstone 6,461, % North Alabama 31,439, % North Carolina 41,519, % North Georgia 40,481, % All Conferences 1,786,873, % General Board of Pension and Health Benefits Issued: February

5 Issued October 15, 2008 MPP Annuity Actuarial Valuation for 2010 As of January 1, 2008 Caring For Those Who Serve

6 Actuarial Valuation of from Supplement Three to the Clergy Retirement Security Program The General Board of Pension and Health Benefits, Incorporated in Illinois, administers the Ministerial Pension Plan (MPP), including annuities provided by the plan. MPP is formally known as Supplement Three to the Clergy Retirement Security Program. By General Conference mandate, from 1982 through 2006, MPP covered all U.S. United Methodist clergy (except deacons) appointed within annual conferences or to general agencies. In addition, MPP covered deacons and clergy appointed to other extension ministries when the salary-paying unit elected to sponsor MPP. This actuarial valuation is prepared for plan sponsors (annual conferences, general agencies, and other extension ministry employers). The various plan sponsors are named in the Funding Liabilities by Plan Sponsor section of this report. It is performed based on participant and financial data as shown on the General Board of Pension and Health Benefits records as of January 1, This valuation as of January 1, 2008, is for In other words, if a contribution were due, it would be due in The General Board of Pension and Health Benefits, Incorporated in Illinois, is a separately and independent entity from the annual conferences, general agencies, and other extension ministry employers. The relationship between our organizations within or to The United Methodist does not impair our objectivity. The undersigned actuaries believe this actuarial valuation to be consistent with Actuarial Standards of Practice. GENERAL BOARD OF PENSION AND HEALTH BENEFITS OF THE UNITED METHODIST CHURCH Lisa A. Schilling F.S.A., F.C.A., E.A., M.A.A.A. Jeanne M. Featherstone F.C.A., E.A., M.A.A.A. Issued October 15, 2008 General Board of Pension and Health Benefits Issued: October 2008 i

7 Table of Contents VALUATION SUMMARY...1 ACTUARIAL GAIN (LOSS)...2 ASSET AND LIABILITY BACKGROUND...4 FUNDING LIABILITIES BY PLAN SPONSOR...6 ANNUITY COUNTS BY PLAN SPONSOR...9 BENEFIT AMOUNTS BY PLAN SPONSOR...11 FUNDING LIABILITIES BY GROUPINGS...12 PARTICIPANT DATA...13 DATA RECONCILIATION...14 SUMMARY OF PLAN PROVISIONS...15 ACTUARIAL ASSUMPTIONS AND METHODS...17 GLOSSARY OF TERMS...18 General Board of Pension and Health Benefits Issued: October 2008 ii

8 Valuation Summary January 1, 2007 January 1, 2008 CURRENT ANNUITIES 1 Funding Values Assets $1,900,447,469 $2,192,476,107 Liability (1,559,907,952) (1,821,699,108) Funded Status $ 340,539,517 $ 370,776,999 Funded Ratio 122% 120% Market Values Assets $1,900,447,469 $2,192,476,107 Liability (1,812,308,716) (1,899,919,601) Funded Status $ 88,138,753 $ 292,556,506 Funded Ratio 105% 115% FUTURE ANNUITIES (Funding Values Only) Assets $5,018,528,862 $5,077,151,757 Liability (4,078,788,870) (4,813,450,965) Funded Status $ 939,789,992 $ 263,700,792 Funded Ratio 123% 105% KEY ACTUARIAL ASSUMPTIONS Funding Values Interest Rate for in Pay Status 7.0% 6.25% Interest Rate Prior to Pay Status 7.0% 7.00% Mortality Table RP-2000 RP-2000 Market Values Interest Rate 5.9% 6.48% Mortality Table 2 UP94 UP94 Annuity Conversion Rate 5.6% 6.13% NUMBER OF INDIVIDUALS Clergy 15,121 15,475 Beneficiaries 4,440 4,676 Total Current 19,561 20,151 PARB Deferred 1,766 - Non-PARB Deferred 35,857 34,923 Total Future 37,623 34,923 Total 55,764 55,074 1 All annuities currently in pay status (see page 4 for details). 2 For Market Values, the table is projected with scale AA from 1994 to the valuation year plus 10 years, as used by the PBGC on January 1 of the valuation year. General Board of Pension and Health Benefits Issued: October

9 Actuarial Gain (Loss) Actuarial gains (losses) are the financial expression of the difference between actuarial assumptions and actual experience. There is a gain (loss) when actual experience is financially more (less) favorable than the previous actuarial valuation expected. The actuarial gain (loss) is developed below for current annuities and on the following pages for deferred annuities. CURRENT ANNUITIES Total Liability Market Value of Assets Funded Status (1) Actual Value, 1/1/2007 $(1,559,907,952) $1,900,447,469 $340,539,517 (2) Expected Interest on (1) at 7.0% to 12/31/2007 (109,193,557) 133,031,323 23,837,766 (3) Actual Benefit Payments During ,792,616 (156,792,616) 0 (4) New During 2007 (200,252,466) 223,045,386 22,792,920 (5) Expected Interest on (3)+(4) at 7.0% to 12/31/2007 (1,521,095) 2,318, ,752 (6) Additional Transfers after 12/31/ ,048,232 62,048,232 (7) Expected Value, 12/31/2007 $(1,714,082,454) $2,164,098,641 $450,016,187 (8) Actual Value, 1/1/2008 at 7% $(1,716,372,597) $2,192,476,107 $476,103,510 (9) Actual Value, 1/1/2008 at 6.25% $(1,821,699,108) $2,192,476,107 $370,776,999 (10) Actuarial Gain/(Loss), Demographics/Asset Return, (8)-(7) $ (2,290,143) $28,377,466 $ 26,087,323 Assumption Changes, (9)-(8) (105,326,511) 0 (105,326,511) Total $(107,616,654) $28,377,466 $ (79,239,188) RECURRING GAIN (LOSS) SOURCES: CURRENT ANNUITIES Economic gains (losses) are due to higher (lower) than assumed investment returns and/or increases (decreases) in the interest rate used to discount liabilities. The valuation as of January 1, 2008, assumed that in the long run, plan assets would earn on average 7.0% per year. In 2007, the effective investment return of 8.4% produced a gain due to investment experience of $28.4 million. Demographic gains (losses) occur when annuitants die earlier (later) than the mortality table assumes. Previously, for deferred PARB annuities, we assumed no additional interest credits, and that gains (losses) occur when PARB participants annuitize later (earlier) than the retirement age assumptions. General Board of Pension and Health Benefits Issued: October

10 Actuarial Gain (Loss) (continued) FUTURE ANNUITIES Total Liability Market Value of Assets Funded Status (1) Actual Value, 1/1/2007 $(3,862,992,031) $4,611,022,204 $748,030,173 (2) Expected Interest on (1) at 7.0% to 12/31/2007 (270,409,442) 322,771,554 52,362,112 (3) Actual Benefit Payments During ,054,051 (224,054,051) 0 (4) Annuitizations During 2007 (207,463,643) 326,552, ,088,532 (5) Expected Interest on (3)+(4) at 7.0% to 12/31/ ,664 3,587,434 4,168,098 (6) Additional Transfers after 12/31/ (40,100,482) (40,100,482) (7) Expected Value, 12/31/2007 $(4,116,230,401) $4,999,778,834 $883,548,433 (8) Actual Value, 1/1/2008 at 7% $(4,247,814,633) $5,077,151,757 $829,337,124 (9) Actual Value, 1/1/2008 at 7% and 6.13% Annuity Conversion Rate (10) Actual Value, 1/1/2008 at 6.25% and 6.13% Annuity Conversion Rate $(4,481,142,449) $5,077,151,757 $596,009,308 $(4,813,450,965) $5,077,151,757 $263,700,792 (9) Actuarial Gain/(Loss), Demographics/Asset Return, (8)-(7) $(131,584,232) $77,372,923 $ (54,211,309) Assumption Changes, (9)-(8) (233,327,816) 0 (233,327,816) Assumption Changes, (10)-(9) (332,308,516) 0 (332,308,516) Total $(697,220,564) $77,372,923 $(619,847,641) RECURRING GAIN (LOSS) SOURCES: FUTURE ANNUITIES Economic gains (losses) are due to higher (lower) than assumed investment returns and/or increases (decreases) in the interest rate used to discount liabilities. The valuation as of January 1, 2008, assumed that in the long run, plan assets would earn on average 7.0% per year. In 2007, the effective investment return of 8.4% produced a gain of $77.4 million. Demographic gains (losses) occur when annuitants die earlier (later) than the mortality table assumes. Previously, for deferred PARB annuities, we assumed no additional interest credits, and that gains (losses) occur when PARB participants annuitize later (earlier) than the retirement age assumptions. General Board of Pension and Health Benefits Issued: October

11 Asset and Liability Background Following is a description of the various assets and liabilities shown in the actuarial valuation. During 2007, participants with a PARB balance were given a choice to either retain or relinquish their PARB account, by October 31. By 2008, except for a handful of participants, all PARB benefits were converted and their continued presence in the valuation of MPP will amount to zero dollars, moving forward. ASSETS During most of 2007, the MPP were invested in the Multiple Asset Fund (MAF). In late 2007, after extensive study, the General Board began shifting the asset allocation for MPP from 65% to 40% equities. Lesser exposure to equities will reduce the risk of an unfunded liability in the MPP. For the future MPP annuities, that is, for the individual account balances, asset allocation is determined by the LifeStage Investment Management Service (LifeStage). LifeStage allocates an individual s retirement account assets based on the individual s age, other retirement account assets held at the General Board, and responses to the LifeStage Personal Investment Profile. LIABILITY The liability, or actuarial present value of benefits, represents the value as of the valuation date of all: Current and expected future benefit payments from annuities currently being paid, or Expected future benefit payments from accounts that are likely to become annuities in the future. This actuarial valuation shows two liability types: funding liabilities and market values. Funding liabilities are calculated using long-term actuarial assumptions, as is appropriate when the plan sponsor retains the risk for funding annuities. Market values show the approximate cost of shifting that risk to an insurance carrier by purchasing annuities, thereby settling the plan s obligation to participants. FUNDED STATUS Funded status is the difference between assets and the liability for benefits. A positive funded status shows that assets exceed the value of liabilities, and a negative funded status shows an unfunded liability that may require further contributions. General Board of Pension and Health Benefits Issued: October

12 Asset Reconciliation Following is the reconciliation of assets from the prior year. Current 3 Deferred PARB Other Future Actuarial Value of Assets, 1/1/07 $1,900,447,469 $ 407,506,658 $4,611,022,204 Transfer to CRSP-DB to cover 2007 benefit payments (21,947,750) 0 0 Total Benefit Payments (156,792,616) 0 0 New and PARB Election Transfers 244,733,398 (378,120,142) 102,498,124 Investment Earnings 163,987,375 12,945, ,400,395 Market Value of Assets, 1/1/08 $2,130,427,875 $ 42,331,516 $5,074,920,723 Adjustments after 12/31/2007 Transfer from CRSP-DB 21,947, Final PARB Election Transfer 40,100,482 (40,100,482) 0 Actuarial Value of Assets, 1/1/08 $2,192,476,107 $ 2,231,034 $5,074,920,723 Current Future Total Actuarial Value of Assets $2,192,476,107 $5,077,151,757 3 Current includes PARB and PARB reserves for PARBs in pay status. General Board of Pension and Health Benefits Issued: October

13 Funding Liabilities by Plan Sponsor Current Plan Sponsor Group 8.0% Conversion Market-Rate Conversion Total % of Total Future Annual Conferences $ 1,399,255,875 $ 387,617,522 $ 1,786,873, % $ 4,654,924,095 General Agencies 7,168,221 3,296,169 10,464, % 25,884,390 Jurisdictional Bishops 15,142,097 1,185,708 16,327, % 8,219,451 Extension Ministries 5,991,752 2,041,764 8,033, % 124,423,029 Total Plan $ 1,427,557,945 $ 394,141,163 $ 1,821,699, % $ 4,813,450,965 Funding liabilities by plan sponsor for general agencies are shown below. Funding liabilites by plan sponsor for annual conferences begin on the next page. Current General 8.0% Market-Rate Future Agencies Conversion Conversion Total % of Total GBCS $ 153,053 $ 0 $ 153, % $ 1,267,494 GBGM 3,039,849 1,843,405 4,883, % 6,493,324 GBHEM 557, , % 4,349,960 GBOD 2,123, ,570 2,386, % 8,072,212 GCAH 0 674, , % 37,831 GCCUIC % 686,726 GCFA 405, , % 752,568 GCOM 308, , , % 63,009 GCRR 399, , % 535,527 GCSRW 64, , % 310,525 GCUMM % 162,307 UMCOM 116, , , % 885,149 Subtotal $7,168,221 $3,193,084 $10,361, % $23,616,632 GBOPHB 0 103, , % 2,267,758 All Agencies $7,168,221 $3,296,169 $10,464, % $25,884,390 General Board of Pension and Health Benefits Issued: October

14 Funding Liabilities by Plan Sponsor (continued) U.S. Annual Conference 8.0% Conversion Current Market-Rate Conversion Total % of Total Future Alabama-West Florida $20,714,467 $7,421,248 $28,135, % $73,763,908 Alaska (AUMC) 865, ,463 1,105, % 5,929,662 Arkansas 20,727,730 3,618,012 24,345, % 73,753,173 Baltimore-Washington 32,361,592 12,251,262 44,612, % 111,451,020 California-Nevada 24,171,782 6,930,239 31,102, % 75,488,833 California-Pacific 31,363,284 6,895,445 38,258, % 96,163,811 Central Pennsylvania 28,139,745 5,735,972 33,875, % 91,713,202 Central Texas 12,828,895 5,121,696 17,950, % 53,469,511 Dakotas 10,447,110 2,885,470 13,332, % 36,621,285 Desert Southwest 8,597,795 1,829,372 10,427, % 28,965,623 Detroit 25,165,132 7,746,522 32,911, % 84,988,665 East Ohio 33,851,849 11,646,163 45,498, % 126,683,366 Eastern Pennsylvania 21,279,826 5,725,070 27,004, % 81,744,477 Florida 52,960,865 13,836,261 66,797, % 148,869,477 Greater New Jersey 22,674,773 8,279,070 30,953, % 91,658,021 Holston 28,548,658 7,498,222 36,046, % 91,003,608 Illinois Great Rivers 32,469,641 10,084,877 42,554, % 124,103,082 Iowa 34,092,228 7,992,087 42,084, % 118,076,734 Kansas East 11,386,041 4,207,089 15,593, % 35,132,399 Kansas West 13,000,380 5,333,187 18,333, % 46,854,302 Kentucky 23,234,509 4,787,241 28,021, % 87,176,922 Louisiana 17,400,573 3,001,401 20,401, % 58,649,615 Memphis 17,082,144 3,312,667 20,394, % 51,337,325 Minnesota 18,663,016 6,194,916 24,857, % 65,852,351 Mississippi 26,048,814 9,989,548 36,038, % 84,797,145 Missouri 31,865,847 8,974,640 40,840, % 98,541,170 Nebraska 15,298,998 2,924,463 18,223, % 48,658,762 New England 29,066,942 7,532,152 36,599, % 72,547,922 New Mexico 9,995,477 2,657,983 12,653, % 30,991,320 New York 24,563,358 7,726,231 32,289, % 66,608,086 North Alabama 24,773,453 6,666,021 31,439, % 89,993,378 North Carolina 34,560,045 6,959,286 41,519, % 120,977,573 North Central New York 13,322,695 3,515,386 16,838, % 35,474,797 North Georgia 30,981,814 9,499,304 40,481, % 109,808,981 North Indiana 29,493,612 5,878,749 35,372, % 88,040,549 North Texas 14,703,480 4,054,785 18,758, % 59,089,873 General Board of Pension and Health Benefits Issued: October

15 Funding Liabilities by Plan Sponsor (continued) U.S. Annual Conference 8.0% Conversion Current Market-Rate Conversion Total % of Total Future Northern Illinois 23,854,655 5,171,579 29,026, % 79,097,318 Northwest Texas 8,526,330 1,902,436 10,428, % 40,014,780 Oklahoma 28,765,792 7,759,375 36,525, % 83,187,346 Oklahoma Indian Miss'y 2,506, ,163 2,753, % 4,884,884 Oregon-Idaho 12,339,375 1,934,977 14,274, % 40,387,100 Pacific Northwest 13,714,596 5,235,835 18,950, % 50,522,328 Peninsula-Delaware 12,396,171 3,652,582 16,048, % 47,225,914 Puerto Rico 2,431,425 1,110,538 3,541, % 12,437,486 Red Bird Missionary 339, , , % 2,222,818 Rio Grande 4,753,671 1,932,692 6,686, % 13,391,484 Rocky Mountain 14,023,782 4,278,606 18,302, % 42,949,979 South Carolina 37,339,044 11,222,159 48,561, % 122,771,530 South Georgia 21,230,043 6,359,551 27,589, % 74,146,633 South Indiana 22,476,560 6,806,572 29,283, % 87,599,784 Southwest Texas 15,551,580 3,902,899 19,454, % 59,686,169 Tennessee 20,141,328 5,354,024 25,495, % 61,104,357 Texas 41,339,052 8,008,528 49,347, % 126,556,330 Troy 11,096,452 4,581,880 15,678, % 33,164,119 Virginia 48,396,644 14,111,122 62,507, % 164,103,041 West Michigan 19,414,100 5,918,222 25,332, % 69,622,837 West Ohio 48,818,163 15,375,762 64,193, % 165,560,321 West Virginia 29,674,663 7,394,136 37,068, % 84,414,064 Western New York 11,251,710 4,947,062 16,198, % 37,195,799 Western North Carolina 44,033,087 10,374,326 54,407, % 161,293,921 Western Pennsylvania 40,971,480 10,218,066 51,189, % 118,629,656 Wisconsin 22,339,315 5,888,582 28,227, % 60,439,792 Wyoming 10,085,265 2,875,436 12,960, % 30,632,411 Yellowstone 4,743,448 1,717,722 6,461, % 16,701,966 All Annual Conferences $1,399,255,875 $387,617,522 $1,786,873, % $4,654,924,095 General Board of Pension and Health Benefits Issued: October

16 Annuity Counts by Plan Sponsor Current Plan Sponsor Group 8.0% Conversion Market-Rate Conversion Total Future Annual Conferences 18,026 4,856 22,882 40,489 General Agencies Jurisdictional Bishops Extension Ministries ,671 Total Plan 18,281 5,001 23,282 43,489 Annuity counts by plan sponsor for general agencies are shown below; and counts by plan sponsor for annual conferences beginning on the next page. General Agencies Current Future GBCS 2 20 GBGM GBHEM 3 39 GBOD GCAH 2 3 GCCUIC - 6 GCFA 2 7 GCOM 4 2 GCRR 2 6 GCSRW 1 3 GCUMM - 3 UMCOM 2 10 Council of Bishops 0 20 Subtotal GBOPHB 1 9 All Agencies General Board of Pension and Health Benefits Issued: October

17 Total Annuity Counts by Plan Sponsor (continued) U.S. Annual Conference Current Future U.S. Annual Conference Current Future Alabama-West Florida North Central NY Alaska (AUMC) North Georgia 523 1,177 Arkansas 397 1,280 North Indiana Baltimore-Washington North Texas California-Nevada Northern Illinois California-Pacific Northwest Texas Central Pennsylvania Oklahoma Central Texas Okl. Indian Miss Dakotas Oregon-Idaho Desert Southwest Pacific Northwest Detroit Pen-Delaware East Ohio Puerto Rico Eastern Pennsylvania Red Bird Miss Florida Rio Grande Greater New Jersey Rocky Mountain Holston South Carolina Illinois Great Rivers South Georgia Iowa South Indiana Kansas East Southwest Texas Kansas West Tennessee Kentucky Texas Louisiana Troy Memphis Virginia 731 1,227 Minnesota West Michigan Mississippi West Ohio 784 1,391 Missouri 633 1,528 West Virginia Nebraska Western NY New England Western NC 660 1,366 New Mexico Western PA New York Wisconsin North Alabama Wyoming North Carolina 464 1,045 Yellowstone Grand Total 22,882 40,489 General Board of Pension and Health Benefits Issued: October

18 Benefit Amounts by Plan Sponsor Plan Sponsor Group 8.0% Conversion Current Account Balance Market-Rate Conversion Total Future Annual Conferences $129,043,739 $28,418,887 $157,462,626 $4,910,645,734 General Agencies 618, , ,351 27,226,105 Jurisdictional Bishops 1,485, ,575 1,595,201 8,638,055 Extension Ministries 488, , , ,641,863 Total Plan $131,635,887 $ 28,932,101 $160,567,988 $5,077,151,757 General Board of Pension and Health Benefits Issued: October

19 Funding Liabilities by Groupings Funding Liabilities by Age Group The following shows detail at the denomination level for future annuities. FUTURE ANNUITIES Age Group 4 Number of Accounts Account Balance Funding Liability Under Age 55 23,047 $ 2,202,002,579 $2,085,415,295 Ages ,201 1,323,045,813 1,256,217,545 Ages ,324 1,221,226,034 1,158,821,025 Ages , ,732, ,183,201 Ages ,169,107 19,843,287 Age 75 and above , ,612 Total 43,489 $5,077,151,757 $4,813,450,965 Funding Liabilities by Annuity Form The following shows a summary of liabilities by annuity form. Annuity Form Number of Annual Benefit Payments Funding Liability Life 7,421 $ 35,292,747 $ 337,814,051 J&S 14, ,117,100 1,369,227,439 Certain & Life 354 2,335,044 10,197,603 Certain 1,194 8,896, ,460,019 Total 23,025 $159,641,052 $1,821,699,112 The following shows a summary of liabilities by benefit increases. Benefit Increases Number of Annual Benefit Payments Funding Liability 0% 1,250 $ 10,190,021 $ 93,037,032 2% 20, ,968,081 1,645,435,412 3% 521 3,811,448 47,923,113 4% 303 1,673,484 20,423,082 5% ,018 14,880,473 Total 23,025 $159,641,052 $1,821,699,112 4 Based on age to the nearest birthdate as of the January 1, General Board of Pension and Health Benefits Issued: October

20 Participant Data This actuarial valuation is based on participant data from the General Board of Pension and Health Benefits database as of January 1, The data includes all current annuities (retirees, surviving spouses or beneficiaries currently receiving benefits) as well as participants who have accounts, which are expected to become annuities in the future from the Ministerial Pension Plan. DEMOGRAPHICS The following statistics are as of the previous and current valuation dates. 1/1/2007 1/1/2008 Number of Retirees 17,561 18,158 Beneficiaries 4,612 4,867 Total Current Annuitants 22,173 23,025 Deferred PARB Annuitants 1,766 0 Deferred Non-PARB Annuitants 44,980 43,489 Total Future Annuitants 46,746 43,489 Average Age 5 Retirees Beneficiaries Gender (Male%-Female%) Retirees 89%-11% 88%-12% Beneficiaries 4% - 96% 3% - 97% Deferred PARB Annuitants 82%-18% - Deferred Non-PARB Annuitants 71%-29% 71%-29% 5 Statistics are averaged over the population of annuities; some individuals have more than one annuity. General Board of Pension and Health Benefits Issued: October

21 Data Reconciliation The following chart shows how the number of annuities has changed between actuarial valuations. Note that the 2007 report shows reconciliations by participants, so year-to-year comparisons will not be useful until the 2009 report is issued. Activity Retirees Beneficiaries Deferred PARB Subtotal Future Total January 1, ,561 4,612 1,766 23,939 44,980 68,919 PARB Conversion - - (1,766) (1,766) - (1,766) Changes in status 1 (1) Retroactive Enrollments Annuitization 1, ,321 (1,317) 4 Lump Sum Payout (253) (253) Death with Beneficiary (366) Death without Beneficiary (160) (150) - (310) - (310) Exhausted Certain-Period Benefits (109) (51) - (160) - (160) Agency Splits Data Corrections (61) (60) January 1, ,158 4, ,025 43,489 66,514 General Board of Pension and Health Benefits Issued: October

22 Summary of Plan Provisions PLAN HISTORY Prior to 1982 The Ministerial Reserve Pension Fund (MRPF) provided retirement benefits for U.S. clergy for service prior to After 1982, this era of the plan became known informally as the Pre-82 Plan. These benefits are formally documented as Supplement One to the Clergy Retirment Security Program. Pre-1982 benefits are valued and presented in a separate actuarial valuation report The Ministerial Pension Plan (MPP) provided benefits for U.S. clergy from January 1, 1982 through December 31, This portion of the plan is formally known as Supplement Three to the Clergy Retirement Security Program. It is primarily a defined contribution retirement plan, with the requirement that clergy must convert at least 75% of their total account balance to an annuity. The annuity is a defined benefit feature, and its valuation is presented in this report The Clergy Retirement Security Program became effective January 1, The program consists of both defined benefit and defined contribution plans. Clergy at conference-controlled appointments receive benefits from both plans Effective 1/1/2009, the lump sum percentage allowable at retirement is up to 35%, effective 1/1/2009; and participants are eligible for early retirement after attaining age 62 and 30 years of denominational service. Mandatory retirment age for clergy is age 72, and age 68 for Episcopal bishops. PLAN PROVISIONS RELATED TO MPP ANNUITIES Retirement Eligibility Normal Retirement Early Retirement Age 65 or 40 years of denominational service Age 62 or 30 years of denominational service Monthly Benefit Account balance converted to an Actuarially Equivalent monthly benefit Actuarial Equivalence 1/1982 3/ % interest and the 1971 Individual Annuity Mortality Table Adj. 6 3/1994 5/ % interest and the 1971 Individual Annuity Mortality Table Adj. 7 5/1996 7/ % interest and the 1983 Individual Annuity Mortality Table Adj. 1 7/1/ /31/ % interest and the RP-2000 Mortality Table After 1/1/2007 PARB 8.0% interest and the 1983 Individual Annuity Mortality TableAdj. 1 Other Market-Related Interest Rate and the projected UP94 Mortality Table 1 Market-Related Interest Rate Based on the Citigroup Pension Discount Curve as of the end of the month prior to annuitization. 6 Weighted 80% male, 20% female 7 Weighted 80% male, 20% female General Board of Pension and Health Benefits Issued: October

23 Summary of Plan Provisions (continued) Forms of Annuity Available Benefit Increase Rates Available Participant Life Only Joint & 50%, 60%, 2/3, 70%, 75%, 85%, or 100% Survivor Contingent 50%, 60%, 2/3, 70%, 75%, Life with 5 or 10 Years Certain Certain for 5 or 10 Years to a Beneficiary Certain for 5, 10, 15, or 20 Years (monthly benefits) Certain for 5, 10, 15, or 20 Years (annual benefits) 0%, 2%, 3%, 4%, or 5% annually General Board of Pension and Health Benefits Issued: October

24 Actuarial Assumptions and Methods Following is a list of the actuarial assumptions and methods used in this actuarial valuation. Valuation Date January 1, 2008 Asset Method Market value on the valuation date Interest Rate Funding (long-term) Current 6.25% Future Pre-Decrement 7.0% Annuity Conversion 6.13% with market mortality Post-Decrement 6.25% Market 6.48% 8 Mortality (post-retirement) Funding (long-term) Market Marital Status Current Deferred Spouse s Age Annuity Form Current Future Benefit Increase Current Future Census Data Retirement Rates (applies only to future annuity valuation) RP-2000 Mortality Table Uninsured Pension 1994 Mortality Table (UP94) projected with scale AA from 1994 to the valuation year plus 10 years Actual marital status 100% married Actual age when available; otherwise males are assumed to be three years older than females. Actual elected form Joint & 70% survivor Actual elected increase 2.0% annual post-retirement increases As of the valuation date, as reflected on the General Board of Pension and Health Benefits databases. The specific elements used follow: Participant number Name Responsible plan sponsor Beneficiary number Beneficiary birth date Birth date Gender Monthly/ annual benefit Marked to Market Balance Annuity form Percent increase Certain period end date Age Rate Prior to 62 None 62 15% 63 15% 64 15% % 8 The Citigroup discount rate for immediate pension plans as of December 31, General Board of Pension and Health Benefits Issued: October

25 Glossary of Terms Actuarial Assumptions Expectations of future events that will affect the cost of providing benefits. Two main categories are demographic and economic. Actuarial Gains or Losses The financial impact of actual experience versus actuarial assumptions. Actuarial gains are the results of better than expected experience from a financial perspective. Actuarial losses are the opposite. Represents the total number of types of annuities being paid to participants. Annuitants Represents the total number of participants receiving benefits. Annuity Conversion Rates The actuarial assumptions used to convert an account balance into an actuarially equivalent monthly benefit. Clergy Retirement Security Program (CRSP) - The retirement program for United Methodist clergy at conference-based appointments adopted by General Conference 2004 and effective January 1, 2007 (September 1, 2008 for bishops). Denominational Average Compensation (DAC) The average plan compensation (as defined by the Ministerial Pension Plan and the Comprehensive Protection Plan) paid to all full-time clergy in the denomination, effective two years after the year of calculation. The calculation includes district superintendents, bishops, clergy serving at general agencies and other appointments extending the ministry of the Church. Funding Liability The actuarial present value of benefits as calculated using long-term actuarial assumptions, as appropriate for plan sponsors retaining the risk of funding the annuities. Funded Status The difference between a plan s assets and liabilities. If positive, there is a surplus. If negative, an unfunded liability. General Agency Abbreviations GBCS General Board of Church and Society GBGM General Board of Global Ministries GBHEM General Board of Higher Education and Ministry GBOD General Board of Discipleship GCAH General Commission on Archives and History GCCUIC General Commission on Christian Unity and Interreligious Concerns GCOM General Council on Ministries GCRR General Commission on Religion and Race GCSRW General Commission on the Status and Role of Women GCUMM General Commission on United Methodist Men UMCOM General Commission on Communications General Board General Board of Pension and Health Benefits Liability The actuarial present value of current and future benefits expected to be paid from the annuity. Also known as Present Value of Benefits. General Board of Pension and Health Benefits Issued: October

26 Glossary of Terms (continued) Ministerial Pension Plan (MPP) The pension plan covering United Methodist clergy from 1982 through It is primarily a defined contribution plan, but differs from a true defined contribution plan in that upon retirement, participants must annuitize at least 75% of their account balances, and plan sponsors are responsible for funding the annuities should the need arise. Upon annuitization, the monthly benefit becomes a defined benefit. Ministers Reserve Pension Fund (MRPF) The retirement plan for clergy of The United Methodist Church for service from January 1, 1982 through December 31, Multiple Asset Fund (MAF) Effective April 16, 2004, this became the primary investment vehicle for clergy and lay participants and plan sponsors involved in conference- or employer-paid benefit plans administered by the General Board of Pension and Health Benefits. It is a diversified, multipleasset-class fund that is marked to market daily. It was the fund underlying the Diversified Investment Fund (DIF). The target mix of asset classes of 10% Inflation Protection Fund, 25% Domestic Bond Fund, 45% Domestic Stock Fund, and 20% International Stock Fund. More information about MAF is available on the GBOPHB s web site at PARB See Protected Annuity Rate Balance. Plan Sponsor The entity or entities responsible for funding the plan. For MPP, the plan sponsors are annual conferences, general agencies that employ clergy, and other extension ministry employers that elect to participate in MPP. Present Value of Benefits The estimated total of all benefits to be paid now and expected to be paid in the future, expressed in today s dollars. Protected Annuity Rate Balance (PARB) The accumulated Ministerial Pension Plan account balance through June 30, 2003 of participants who were either age 62 or had 35 years of service as of June 30, When converted to an annuity, this balance is converted at an annuity conversion rate of 8% or the current market-related conversion rate, if greater. Participants with a PARB balance were given a choice to either retain or relinquish their PARB account, by October 31, Settlement Liability The estimated cost to satisfy benefit obligations through purchasing annuities from an insurance carrier. Total Liability The total of all benefits payable by a plan now and in the future, expressed in today s dollars (also known as the present value of benefits). General Board of Pension and Health Benefits Issued: October