# LCMS Convention Workbook_St. Louis Missouri_1975_S179
# Machine transcription, uncorrected — CHI Digital Archive (demonstration)

ADMINISTRATION 179

3. Studies Regarding Status of Plan. The committee and the
Board of Managers are currently working with legal counsel
to prepare a request to the Internal Revenue Service for a
ruling so that the precise status of the plan and its benefits can
be classified under a particular provision of the Internal Rev-
enue Code. Receipt of a favorable ruling from the Internal
Revenue Service would permit the inclusion of vesting pro-
visions and allow for the further considerations of alternate
forms of retirement benefits.

4. Vesting Provisions Under Study. Even though church
plans are not subject to the provisions of the new pension
legislation, the matter of including vesting provisions in the Plan
is deemed necessary and desirable and is recommended sub-
ject to the Internal Revenue ruling indicated in par. 3 above.

5. Alternate Funding and Investment Methods Considered.
The committee has begun a review of potential methods of
funding annuities and/or investment possibilities through
major insurance companies. Data has been supplied to several
insurance companies, and final results are not yet available.
The feasibility of utilizing potential arrangements which may
be proposed by the insurance companies has not yet been de-
termined and will no doubt present complex considerations.
The object of pursuing such arrangements is the prospect of
providing improved benefits. Because of the potential of various
types of arrangements with insurance companies, the committee
is hereby requesting the convention to give consideration to
a special resolution authorizing continued study of, and imple-
mentation of, contracts with insurance companies for the pur-
chase of annuities. A complete resolution with detail included
will be submitted through the appropriate floor committee for
consideration and final action.

6. Lump-Sum Distributions at Retirement. The Pension
Work Committee unanimously agreed upon the conclusion
that no lump-sum withdrawals should be permitted to anyone
receiving subsidy from the Synod or who could potentially be
eligible for subsidy or support. Furthermore, studies made of
the benefit levels currently received by retirees show such
benefits do not appear to be adequate to permit lump-sum with-
drawals of the worker’s personal accumulation at retirement
without subjecting the Synod to the potential of providing sup-
port payments from the budget to help a retired worker or sur-
viving widow maintain an adequate ongoing monthly income.
It is also a conclusion that when, and if, lump-sum withdrawals
can be permitted, highly restrictive conditions will have to be
met by the person requesting such withdrawal. It should also
be indicated that this action is based on the current levels of
benefits and means that the committee has finalized present
consideration of the matter. The increase in the level of benefits
over the next 5 years from the combined sources of this plan
and the new Concordia Plans is such, however, that a review
of this matter will continue and a recommendation will be made
when it is determined that lump-sum withdrawals could be
made without reducing monthly income to a level at which a
possible future request for subsidy or support from the Synod
can be foreseen for the worker or his surviving widow.

7. Optional Forms of Retirement Payments. Further analysis
of the potential of other forms of benefit payments at retirement
has indicated that no recommendation can be made until a
response has been received from the Internal Revenue Service
concerning the status of the Plan under the Internal Revenue
Code.

As indicated in a previous report, the years up to 1980 are
critical years for our retirees, and continued attention will be
required to see that adequate benefits are provided. The in-
creased benefits provided over the past 6 years and the current
studies in process demonstrate the concern this committee has
for analyzing all factors involved in these matters so sound
decisions are made, and that retired workers are given every
consideration so that the plan can assist them in providing for
their financial needs.

Ralph E. Petering, Chairman

4-10

Report of Board of Trustees
for Trust Funds

The Board of Trustees for Trust Funds presents, herewith,
its report covering the two fiscal years ended Jan. 31, 1975.

Pursuant to the authority contained in Sections 10.15 and
9.27 of the Handbook of the Synod, the Board of Trustees man-
ages the investment of the following funds:

Pension Plan for Pastors and Teachers
LLL Endowment Fund
Sundry Trusts constituted as:

Fixed Income Account *A”’
Equity Account “B”
Mixed Account ‘‘C”

The Trustees manage the funds in accordance with written
investment principles and policies, revised from time to time,
and approved by the Board of Directors of the Synod. The
several trust funds have been audited each year by the inde-
pendent certified public accountants employed by the Synod,
and reports of such examinations are on file in the office of the
Treasurer of the Synod.

Pension Plan for Pastors and Teachers

The following is a summary of the invested assets of the fund
for the Pension Plan for Pastors and Teachers, showing each
class of securities at cost at the beginning of the 2-year period,
the end of the first fiscal year, and Dec. 31, 1974:

Jan. 31, 1973 Jan. 31, 1974 Dee. 31, 1974

U.S. Government and Federal

Agencies Bonds $ 8,562,597 $ 8,059,022 $ 6,750,203

Canadian Bonds 1,563,193 1,467,443 1,593,143
Utility Bonds 18,559,028 18,414,163 18,298,047
Railroad Bonds 4,266,102 5,304,599 5,127,351
Industrial Bonds 6,574,352 7,273,852 8,276,227
Private Placements 360,000 290,000 240,000
Church Mortgages 4,562,584 4,481,148 4,152,005
Common Stocks—U.S. 37,306,269 41,757,486 42,754,623
Common Stocks—Canada ____._ 817,582 817,582 733,106
Cash and Temp. Invest. 4,014,913 680,647 1,091,917

$86,586,620 $88,545,942 $89,016,622

During 1974 the plan year of the Pension Plan for Pastors and
Teachers was changed to the calendar year. Hence, the pre-
sentation of investments at Dec. 31, 1974.

The Pension Fund, which began in October 1937, has grown
in the past 2 vears almost entirely from the excess of earnings
and net realized gains from security sales over the amounts
paid out of the fund as pension annuities. Since the beginning
of the Concordia Retirement Plans in 1965, contributions to
this plan have been continued only for a small number of par-
ticipants ineligible for the new Concordia Plans, eligible workers
who did not choose to join the new plans, and through Dec. 31,
1971, for Canadian workers. Consequently, investment results
with the fund continue to be the most important factor in the
possible improvement in benefits to future pensioners from this
plan.

The investment policies of the Board of Trustees provide
for investments in fixed income securities and equity securities
of investment quality. Equity investments are limited to a maxi-
mum of 70% at market value of the total fund. In addition, the
policies provide for investments in church loans in accordance
with criteria established by the 44th convention of the Synod.

The 1l-year-11-month period from Jan. 31, 1973, to Dec. 31,
1974, saw severely declining market values in both stocks and
bonds. From the peak market value of aggregate investments
at Jan. 31, 1973, of approximately $98,000,000, the market values
of the Pension Fund declined to an aggregate of approximately
$72,500,000 at Dec. 31, 1974. At Dec. 31, 1974, the market value
of stocks was below cost by approximately $7,600,000 in the
aggregate. It can be reported, however, that as of March 26,
1975, the market value of common stocks had recovered to a
level approximately equa! to cost in the aggregate. While the
market value of fixed income securities (bonds, etc.) has con-
sistently been below cost, the Trustees have used the oppor-
tunities in the past 2 years to acquire a substantial amount of
short term (up to 10 years) high yielding quality bonds, so that
the current portfolio consists of bonds with improved interest
yields, with 95% of the total principal amount of bonds maturing
in 16 years. No losses are anticipated in the bond portfolio.

As a matter of information, the popular stock market aver-
ages (Dow-Jones Industrials, Standard & Poor’s, and Moody’s)
have shown declines in the stock market from 38% to 42% in
the period Jan. 31, 1973, through Dec. 31, 1974.

All sales of securities have resulted in a net capital gain.