LCMS Convention Workbook St. Louis, Missouri — 1983, Page 154

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154 ADMINISTRATION AND PROGRAM IMPLEMENTATION

were four operators trained, selected from the manual
processing group to have the advantage of their experi-
ence, and now there are 16. The final phases of the claims
processing system will be in place by May 1983, at which
time the needed number of trained operators will be in
place, too. A few sentences certainly cannot describe all
that has gone into accomplishing the progress made to
this point. That progress has not been without its effect on
the participants in the Concordia Health Plan—some
good, and some not good. The understanding and patience
of the members during the conversion process has been
sincerely appreciated.

—Annually the financial activities of the Concordia Health
Plan are audited. The 1982 audit report is included as
Exhibit A of this report.

—The investment of the assets of the Concordia Health
Plan is handled by Harris Trust and Savings Bank,
Chicago, II]. Those assets represent the reserves required
to cover certain benefits of the plan. The $12,234,193
available for investment at Dec. 31, 1982, as well as
contributions received in the early months of a calendar
quarter and not used for benefits by the end of the
calendar quarter, are all invested in fixed income securi-
ties. This is because of the nature of the fund—high
turnover of investments and liquidity needs. During 1981
the return on the investments was 10.64%, and for 1982
was 30.5%.

Concordia Disability and Survivor Plan

The Concordia Disability and Survivor Plan has been
designed to meet two major needs: to pay a monthly benefit
when a member becomes totally disabled and to pay survivor
benefits (lump-sum and/or monthly income) upon the death of
amember before reaching retirement age. In addition, the plan
pays a lump-sum benefit upon the death of a dependent.

—More than 19,000 members are enrolled through 5,800
congregations, schools, and agencies in the United States
and Canada.

—The disability and survivor benefit payments were
$2,929,198 for 1981 and $3,104,419 for 1982.

Benefits Paid 1982 1981

Survivor Income ...... ..... $1,654,993 * $1,407,778

Number of Beneficiaries ..... 719 691
Lump Sum Death ........... S$ 445,793 * $ 511,055 ***
Number of Beneficiaries ..... 92 110
Disability Income ........... $1,003,633 ** $1,010,365 ***
Number of Beneficiaries ..... 508 540

* OnJan. 1, 1982, the monthly benefits for the dependents of deceased members
were increased by 10". This increase was welcomed and appreciated. These benefit
payments include those provided by the insurance carrier and those paid directly by
the plan.

~* During 1982 these benefits were mainly paid from the Concordia Disability
and Survivor Plan ($859,345) due to the realignment of the benefits of the plans
effective Jan. 1, 1982. However. payments that commenced prior to that date under
the Concordia Health Plan continued to be paid from the Concordia Health Plan
during 1982:$144.288). The combined amount is shown under this plan to enable the
total amount of the disability benefit payments to be reflected. and in one place.

«** These payments were made from the Concordia Health Plan. With the
realignment of benefits. effective Jan. 1, 1982. they are now paid from the Concordia
Disability and Survivor Plan.

—Annually an actuarial valuation of the plan is performed.
There are two primary purposes for doing so. First, it
indicates whether the current contribution rates will
support the benefits to be paid. Second, the actuarial
valuation indicates whether the assets on hand are
sufficient to provide all of the future benefits for claims in
pay status. These objectives have been met for the
Concordia Disability and Survivor Plan.

—The financial activities of the Concordia Disability and
Survivor Plan are audited annually. Exhibit B of this
report reflects the 1982 audited financial statements.

—Harris Trust and Savings Bank, Chicago, IIl., invests the
assets of the Concordia Disability and Survivor Plan. The
guidelines adopted by the Board of Managers of the
Worker Benefit Plans permit up to 40% of the assets to be
invested in equity investments, with the remainder of the
assets in fixed income securities. At Dec. 31, 1982, the
assets invested were such that $3.1 million (62% of the

fund) was in fixed income securities and $3.1 million (38%
of the fund) was in equity investments. The fund earned a
return of .36% for 1981, and 27.6% for 1982.

Concordia Retirement Plan

The purpose of the Concordia Retirement Plan is to provide
a pension benefit at age 65. However, there are provisions fora
pension to begin as early as age 55 or as late as age 70. In
addition, upon the death of a retiree, a spouse may be eligible to
receive a lump-sum benefit as well as a monthly income benefit.
The plan also provides a lump-sum benefit payment upon the
death of a dependent of a retiree.

—The 19,000 members of the Concordia Disability and
Survivor Plan are also enrolled in the Concordia Retire-
ment Plan.

—Benefits provided by the Concordia Retirement Plan
during the past biennium were the following.

Benefits Paid 1982 1981
Retirement Income .......... $3,908,875 * $3,189,778
Number of Beneficiaries ..... 2,857 2.673
Post-Retirement Death ...... $ 199,084 “*
Number of Beneficiaries ..... 67

* OnJan. 1, 1982, an increase in the monthly retirement benefit was implemented
of 1” for each year since the beneficiary's retirement date, with 10" being the
maximum amount. This increase was much appreciated by the recipients.

* Postretirement death benefits. before the realignment of benefits as of January
1982, were paid from the Concordia Health Plan and the Concordia Survivor Plan.
The amount of the postretirement benefits cannot readily be identified separately
from the amount of the preretirement benefits. Therefore those benefits are not
shown here, but if reflected, the 1981 benefit amount would be lower than the 19&2
amount.

—An actuarial valuation is done each year to determine if
the plan is being adequately funded. This is done by
comparing the present value of all benefits accumulated
for the participants to the present value of the existing
assets and the present value of future contribution
payments to the plan. The actuarial valuation of the
Concordia Retirement Plan indicates the plan is being
properly funded. —

—The 1982 Concordia Retirement Plan audited financial
statements can be reviewed in Exhibit C of this report.

—During 1982 the Board of Managers of the Worker Benefit
Plans completed the implementation of the restated
Investment Policy and Guidelines for the Concordia
Retirement Plan. The restatement of the Investment
Policy and Guidelines was the result of an extensive study
of the Concordia Retirement Plan, which included utiliza-
tion of computer simulation models of future results based
on varying plan requirements and investment results.

—Protection of the assets of the plan (safety of principal) is
a high priority consideration in the investment strategy
of the board. This consideration resulted in diversifying
the investments among a group of managers, each witha
responsibility for a segment of the asset strategy deve-
loped by the board. ao

The listing below shows the managers selected on the
basis of their expertise and performance as to the role
they have for the investment of the assets of the Concordia
Retirement Plan.

Manager Role ~ Fund
Investment Advisers, Inc. Balanced
Minneapolis, Minn. Fund 15™-
Fiduciary Trust Company Balanced
New York, N.Y. Fund 13"

Funds Advisory, Inc. Fixed Income

Houston, Tex. Specialist Fund 10":
T. Rowe Price Assoc., Inc. Fixed Income
Baltimore, Md. Specialist Fund 10%,

Alliance Capital Mgmt. Corp. Equity Specialist

Minneapolis, Minn. Fund 15".
Morgan Guaranty Trust Co. Equity Opportunity

New York, N.Y. Fund 20”:
Morgan Guaranty Trust Co. Immunized Bond

New York, N.Y. Fund a7
New England Mutual Life Guaranteed Investment
Burlington, Mass. Contract a”