Confirmed: Pensions Board Issues Traditionalist Plan Concerns, Wespath Updates FAQ

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Two Weeks of Churn

Two weeks ago, Hacking Christianity published the article “Wespath study reveals Traditionalist Plan cruelly targets Clergy Pensions” which examined the Traditionalist Plan’s uneven effect on our pensions. It was meant as a resource for General Conference delegates to see if they wanted to afflict clergy unequally, and for annual conferences to consider if they are thinking about withdrawing under its provisions.

Within an hour of the blog post, Traditionalist Plan supporters wrote that the analysis was not true. Calls were made to my annual conference staff, and to Wespath (the UMC pension and benefits agency) board members. Wespath tweeted “feeling misinformed?” graphics. A bishop’s staffer requested a delegate in the West lobby me to take the post down. Bishops and pension managers sent mass emails to their annual conferences telling people to only get their info from official sources—not blogs.

The flurry of activity and high-level pressure had a common theme: surely the Traditionalist Plan wasn’t that broken. Surely it couldn’t be that unfair to clergy lifetimes of service! And surely the analysis by the blog post was false, right? Right??

But now the truth of those claims has been independently verified.

Pensions Board Study

The Northern Illinois Conference Board of Pensions, either independently or spurred on by the January blog post, decided to investigate further into the Traditionalist Plan legislation. As an annual conference board, they are obligated to look after the concerns of their conference clergy, who would bear the financial impact of these decisions.

Their report is written with plain language on a complex topic. Here’s a few quotes, but definitely read their blog post, especially as it explains how the unaddressed problem of inflation reduces the value of the clergy’s earned pension in an exited conference.

[A]s currently written, the traditional plan will freeze the accrual of benefits for the clergy of a separating annual conference; The UMC will not fund the inflation adjustments that dramatically change what clergypersons expect to receive in pension for the years already worked… 

It is incorrect to claim that any outcome of General Conference 2019 “avoids disruption to clergy pensions.” Shifting pension liabilities between separate legal entities is disruptive. It is impossible to predict the capacity or the willingness of a separated annual conference to restore the accrual of benefits frozen by The UMC…

While everyone may have the best intentions, recasting the conference relationship to the denomination as the traditional plan provides will change the capacity of the conference to provide benefits. Under the traditional plan, when an annual conference leaves or is forced out, The UMC will freeze benefit accruals. No one should be guaranteeing that clergy will not experience any change when much of that outcome lies with decisions of a future conference with less capacity than the present one.  

It’s important to note this is not an uneducated yahoo conference board: one member was a former Wespath rep to the General Conference that createdthe current clergy pension program. So their careful research is informed and super-helpful for other annual conferences considering how to connect with their clergy concerns.

Wespath Updates FAQ

The blog post two weeks ago apparently caused a lot of headaches for Wespath and conference pension officers. Some of it was due to the supporters of the Traditionalist Plan freaking out. And some of it was due to misreading the blog post’s claims. I apologize for any disruptions of people’s days as a result of the post.Wespath responded with an expanded Frequently Asked Questions on A Way Forward which dealt directly with some of the questions raised by Hacking Christianity—in fact, they went from about 18 questions answered to over 40 questions answered inside of a few days. Overall, Wespath does a good job answering questions brought up by the blog post and peripheral questions that the blog post didn’t ask. It’s great for annual conferences and clergy and laity to have a well-rounded resource created in just a few short days. Check it out!

Are the claims true?

So we now have these two resources. How do they handle the claims made in the original blog post about the way how the Traditionalist Plan unfairly handles clergy pensions? 

Claim #1: Clergy in exited conferences are treated differently than continuing clergy

Relevant Wespath FAQ entry: What if the Traditional Plan prevails and an entire annual conference does leave The United Methodist Church? What would happen to clergy benefits and annual conference liabilities?

  • Wespath confirms that the exited annual conference would be sequestered (“frozen”) and capped (“cease increasing”). Also confirmed is that medical coverage, life insurance, death payouts, etc would cease unless the exited conference continued them.

Relevant Pension Board quote:

This proposed conversion is available to clergy who withdraw from the annual conference. It is likely unavailable to clergy whose annual conference separates from the denomination as legislation is currently written. Petition #90017 and Discipline paragraph 360 refer to a clergyperson withdrawing “…from their annual conference.” While the traditional plan asserts, “clergy members of the departing annual conference shall by default remain members of that annual conferenceunless they request to remain in The United Methodist Church.”…as currently written, the traditional plan will freeze the accrual of benefits for the clergy of a separating annual conference; The UMC will not fund the inflation adjustments that dramatically change what clergypersons expect to receive in pension for the years already worked. 

Summary: Everyone keeps their pension earned. Continuing clergy in the UMC will receive benefit improvements based on years of service. Clergy in the exited conference would not get this benefit improvement, and will not get the “fix” offered by Wespath in petition #90017 that other clergy would receive.

Claim #2: There could be a $300,000 gap between continuing and exited clergy

Relevant Wespath FAQ entry: Is it true that if the Traditional Plan is approved, my pension will automatically be cut?

  • This is accurate: no one loses their pension earned. What claim #1 above articulates is that the benefit improvements would be unequal between an exited annual conference and a continuing one.

To calculate the original $300,000 claim, we used a document from Wespath that was made for annual conferences who exited clergy before the Traditionalist Plan would take effect (ie. now). The document articulated that the gap between a clergyperson who turns in their credentials and a clergyperson who continued in United Methodism would be almost $300,000 in missed benefits and benefit improvements. While it is true now (and Wespath used it themselves for a 2019 delegation briefing), it wasn’t actually made for the post-GC possible scenarios, and there are some differences.

First, the document included HRA contributions as a benefit. But HRA contributions come from the Annual Conference and not the pensions and benefits office, so that’s $60k that shouldn’t be part of the equation. Thanks to Wespath executives for correcting this in an email exchange.

Second, to calculate benefit reductions, I asked for a one-to-one comparison tool and Wespath said there were too many variables to be able to offer one, so we don’t know the actual discrepancy. There is no way to know what an exited conference (now a new denomination) would do with the death benefits and other benefit improvements, as they would not be obligated to do anything The UMC is currently offering.

Indeed, their capacity to offer similar benefits as an entire denomination would be reduced. Relevant Pension Board quote:

Not all the money in the separated conference’s CRSP account will transition with that annual conference. The assets will be reduced by the costs of promises to clergy who decide to remain in The UMC and contingent annuitants by something like 170% of what a conference contributed (market rate vs. funding rate). Subtracting those amounts leaves fewer resources than originally contributed for the clergy who migrate with the separating annual conference.

Summary: We regret we were partially incorrect about the $300,000 number, as the only quantifiable gap is the $150,000 lack of benefit improvements in the example by Northern Illinois. But given the reductions in the ability/obligations of the exited conference, we continue to be confident that the gap would be higher than thatestimate regarding the final real value of the pensions earned from 2007-2019, solely because of a conference being exited by the Traditionalist Plan.

Mind the Gap

We now have clarity from the annual conference perspective and from the general agency perspective. And even though Wespath advised the anonymous Traditionalist Plan authors on this section with the best possible outcome that the best-paid professionals in United Methodism can think of, there’s still an incredible gap between clergy exited by the Traditionalist Plan and those who continue. The proposed structure of pensions and benefit improvements is the best solution to the problem of the Traditionalist Plan, and it falls far short.

Wespath, working within the constraints of the legislation (which was written outsideof Commission on A Way Forward discernment–probably a source of a lot of its problems!), was unable to find a legal pathway to equal treatment, though they got closer than any mere mortals could.

The only conclusion left is that the Traditionalist Plan is fundamentally flawed.

A Better Way Forward

As a clergy member of an annual conference vulnerable to being exited by the Traditionalist Plan, it is my obligation to my colleagues to provide accurate information. It is also my obligation to my family, given my 30 years of future ministry means my compensation gap between continuing in the UMC and being exited by the Traditionalist Plan is wider than most people. I’ve served every year of CRSP too, so my personal situation is perhaps the most extreme example of someone potentially harmed by the Traditionalist Plan.

I’m heartened that the blog has awakened many to the incredible unavoidable pitfalls of the Traditionalist Plan’s provision to exit annual conferences. And if you delete that provision entirely…then it just continues the UMC on the path we have been and will do nothing to change the status quo.  The response of Traditionalist Plan supporters is “we can fix it later” but that is becoming a tired refrain: the Traditionalist Plan will require both substantial legal amendments to satisfy the Judicial Council, and risky floor pension amendments that could become far afield of what Wespath would want to be able to care for clergy retirement and benefits. At some point, reasonable Traditionalist Plan supporters will need to concede it is too broken to fix, especially when more legal and fair solutions are on the table.  My hope is that General Conference delegates are more creative and seek the novelty of One Church Plan, Simple Plan, or the Connectional Conferences Plan as more viable, creative, and faithful ways forward.

Your turn

Thoughts? Thanks for reading, commenting, and sharing on social media. And for sharing this article with those who originally disputed it.

The Rev. Jeremy Smith serves as senior pastor of First United Methodist Church of Seattle, Wash. This post is republished with permission from his blog, Hacking Christianity.