Wespath Execs: United Methodist Clergy Pensions Are Well-Secured

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Partners in the Pan-Methodist coalition – including the United Methodist Church -- were shocked last September when the African Methodist Episcopal Church halted pension payments to its retirees while it conducted a forensic audit. In March the church announced that some $90 million of its $128 million pension fund has been lost.

Three federal class-action lawsuits representing the denomination’s 5,000 retired clergy and church employees are pending against the AME Church, its former pensions officer, the Rev. Jerome V. Harris, and other parties. The denomination denies any wrongdoing, claiming that Rev. Harris and other parties conspired to embezzle the church’s funds for their personal use (see accompanying article, “AME Church Alleges Former Retirement Services Exec Embezzled Tens of Millions”).

While lamenting the financial fate of retirees in the historically black AME denomination, United Methodist retirees – who include clergy and church employees at several levels – can be reassured that their pensions are held under strict accounting and investment disciplines, two top executives of Wespath Benefits and Investments told United Methodist Insight in a recent telephone interview.

Andy Hendren, who in January succeeded longtime general secretary Barbara Boigegrain as top executive, noted that The United Methodist Church and its predecessor bodies have been concerned for the welfare of retired pastors since 1784. That’s when the “book concern,” the forerunner of today’s United Methodist Publishing House, was established to provide revenue for clergy pensions.

Wespath’s chief investment officer Dave Zellner said United Methodist clergy pensions are secured through several decentralized practices that prevent any one person from having sole access to pension funds. News reports indicate that the AME Church did not have these types of decentralized practices.

Mr. Hendren added that the church’s investments are diversified across a broad array of investment asset classes.

Wespath, which does business as an independent corporation chartered in Illinois, is formally the United Methodist General Board of Pension and Health Benefits, today’s successor to the pensions board established as a church-wide agency in 1908. Wespath handles health insurance and retirement accounts for United Methodist clergy and some church employees, along with managing the financial assets of many UMC general agencies, conferences, conference foundations, and other mission organizations. The corporate structure enables Wespath to be both flexible in its investments and stringent in its accounting procedures, according to its 2021 annual report published earlier this year.

As of late May, United Methodist pension assets totaled around $23 billion, down from $27 billion earlier this year because of downturns in the stock market, Mr. Zellner told Insight. Total assets managed by Wespath are around $30 billion – again a figure that fluctuates according to market trends, the investment officer said.

Wespath invests the assets entrusted to its care according to professional counsel from some of the most reliable U.S. fund managers, said Mr. Zellner. It appears these practices may not have been in place at the AME Church.

“We work with Bank of New York-Mellon, which is our custodian of assets, and we use external advisors and asset managers such as JP Morgan, Blackrock, and others registered with the Securities and Exchange Commission,” Mr. Zellner said. “Each business day we prepare reports for our clients based on information from Bank of New York-Mellon.”

Wespath’s new CEO Hendren emphasized that transparency is key to the agency’s security practices.

“Our programs are run in a professional and structured manner,” Mr. Hendren said. “Our directors are elected by the General Conference and jurisdictional conferences. We employ accountants, lawyers, and investment professionals. We use internal and external auditors and a compliance department to make sure we meet financial and operational standards. We segregate duties; no one person has sole oversight of anything.”

Mr. Hendren said that Wespath is evaluated independently by the accounting firm Grant Thornton according to a “service organization control audit” in the same manner as many commercial providers.

“The SOC audit assures that processes are good between customers and us,” Mr. Hendren said, noting that pension account holders have 24/7 access to their accounts via the Wespath website.

Mr. Zellner added: “We go through a rigorous process to produce the SOC report. It’s a big bar that financial institutions must meet to certify they’re in compliance with best financial and operational controls.”

Last year Wespath achieved a new goal of meeting Global Investment Performance Standards, another independent verification of how Wespath reports the return on investments, Mr. Hendren said.

“We believe in being very transparent with our investors,” said Mr. Zellner. “Clients can read our investment policy, and our investment fund description provides significant details. They can see every security we hold, what we’re doing and how we’re doing it.”

In the most recent example, Mr. Zellner made a video May 25 to report on how the stock market downturn affected pensions. The website page holding the video includes a link to resources on how to handle market downturns. In late April, Mr. Hendren wrote a blog post in which he described how Wespath is adapting to meet client needs in light of the movement toward disaffiliation from the UMC.

In these turbulent days of the UMC splintering, Wespath has worked with annual conference treasurers and other church officials to prepare several scenarios regarding how clergy pensions will be handled in case of disaffiliation. Its page of disaffiliation resources includes a copy of the “friend of the court” brief Wespath filed with the Judicial Council when it considered the question of whether annual conferences may unilaterally withdraw from the UMC. Wespath’s brief highlighted the pension and benefits uncertainties and complexities related to the question. The Judicial Council ruled that, as the basic units of the denomination, annual conferences don’t have the right to leave the UMC on their own decision.

Meanwhile, as the fledgling Global Methodist Church proceeds, annual conferences are most concerned with local congregations that choose to leave the UMC. Withdrawal procedures will differ for disaffiliating congregations than for clergy who leave, said Mr. Hendren.

“The withdrawal amount payable by disaffiliating churches for unfunded clergy pensions will be decided by annual conferences,” said Mr. Hendren. “We provide an annual conference with information on its overall pension liability, and then the annual conference will decide what portion a departing congregation will pay. With individual clergy pensions it’s a much simpler process that converts earned pension benefits to an equivalent individual account balance.”

Whatever direction United Methodist retirees may take in the future, they can be assured that their investments with Wespath are kept secure.

Cynthia B. Astle serves as Editor of United Methodist Insight, which she founded in 2011. To reproduce this content elsewhere, please email for permission.