Collection › LCMS Convention Workbook (St. Louis, Missouri) › 1969 · 48th Convention › Page 469
LCMS Convention Workbook St. Louis, Missouri — 1969, Page 469

Scan: The Lutheran Church—Missouri Synod
Transcription machine transcription, uncorrected

STEWARDSHIP AND FINANCES; RETIREMENT AND BENEFITS 469

Board of Pensions and Support — secretary of the

Work Committee
Earl Haake, administrator of the Concordia Plans
Herbert W. Schuppan, chairman of the Board of Man-

agers of the Concordia Plans

The Work Committee has consulted with Nelson and
Warren, Inc., consulting actuaries for the Concordia
Plans and the Pension Plan for Pastors and Teachers,
and James P. Brown, counsel for Synod. The first meet-
ing of the Work Committee was held on April 27, 1968,
and subsequent meetings have been held on Aug. 10,
1968; Nov. 2, 1968; Nov. 23, 1968; Jan.11, 1969: and
March 8, 1969.

The committee studied the plans and had several
actuarial valuations made. It then addressed itself to
the consideration of merging the Pension Plan for Pas-
tors and Teachers with the Concordia Retirement Plan.
In the 4 years since first studied, the technical and fund-
ing problems have not disappeared while the positive
reasons for combination have diminished.

If the plans are kept separate, many of the pastors
and teachers under age 55 will receive a greater retire-
ment benefit than they would receive on basis of full
credit in the Concordia Retirement Plan for past ser-
vice. No one has the right or the desire to take this
greater benefit away from them.

On the other hand, if those presently retired, and
others who will retire in the next few years, were to
receive benefits raised to the level of full Concordia
Retirement Plan benefits, it would cost some 20 million
dollars which would have to be provided in a relatively
short time from some source.

This did not even take into account the legal prob-
lems which were not fully researched, but are formi-
dable.

A merger of the Pension Plan with the Concordia
Retirement Plan is, therefore, not recommended at this
time.

The committee, therefore, addressed itself to the
problem of upgrading the Pension Plan. In the light
of the studies which were made, various courses of
action were considered, and decisions were reached
which resulted in the following recommendations:

1. Allocate the same investment yield to both the
Annuity Fund and the Active Accounts. The Work
Committee feels that the principle of equity to all mem-
bers of the plan requires the same distribution to both.
This compares with the present practice which has
credited the interest assumption in the annuity pur-
chase rate to the Annuity Fund and a yield more closely
associated with the earnings rate on the total assets
to the Active Accounts. For example, the most recent
declaration was 3% to the Annuity Fund and 5% to the
Active Accounts.

2. It was determined that under the present annuity
purchase rate (1955 American Annuitants, set back
1 year, 3°) the required reserves for annuity payments
are less than the assets of this fund, creating a surplus
of approximately $1,700,000. We recommend this be

credited to the presently retired members and widows
in the form of increased annuities of approximately 16
over their present annuities.

3. Revise the annuity purchase rate that is applied
to account balances of retiring members to the 1951
Group Annuity Table, projected to 1965 on Projection
Seale C, with 442° interest. This basis reflects a more
up-to-date mortality table, which recent group annuity
experience studies have shown to be representative of
current mortality of annuitants, with margins for future
mortality improvement. The 412° interest assumption
is justified by the experience of the plan in recent years
and the current trend in investment opportunities for
the fund. In addition, this new annuity purchase rate
will be consistent with the actuarial assumptions pres-
ently used in the valuation of the Concordia Retirement
Plan,

This would result in an increase in the amount of
annuities being purchased of approximately 20% —22%
above those provided in the present annuity purchase
rate.

4. The above considerations presented the opportu-
nity to increase the annuities to the present retired
members to approximately 38°; above the present an-
nuities being paid. For the most part, granting such an
increase would result in an exact offset in the amount
of subsidy being provided by the Synod. There was a
strong feeling in the Work Committee that the present
level of subsidy has become inadequate since the time
it was established at $150 per month and that the
sources for increased annuities described above should
best be used to enable the Board of Pensions and Sup-
port to propose a new level of total pension payment.
The Work Committee, therefore. is recommending that
the board increase the total pension payments to be
provided from retirement annuities and subsidy to $165
per month. This will still result in an overall reduction
in subsidy payments of slightly more than $100,000 in
1969 and propcrtionate reductions in future years’ ex-
pected subsidy outlay. Corresponding increases would
be granted in widows’ pensions to maintain the present
60° relationship.

5. The stock portfolio of the fund presently shows
an appreciation of approximately 10 of the total assets
of the fund. The Work Committee feels that this pres-
ent condition and the future outlook for the portfolio
and its investment policy will continue to create such
gains and we should begin to distribute these among
the active members and the retirants. The first step
would be to allocate both to the Annuity Fund and to
the Active Accounts 50’ of the current amount of ap-
preciation in the stock portfolio. This will result in a
credit of approximately 5°, to the Annuity Fund and
the Active Accounts above the amount of investment
yield also being allocated. This initial distribution is to
be made on Aug. 31 in recognition of the appreciation
of Jan. 31, 1969. The allocation will be made on the
amount of the Annuity Fund and the amount of the
Active Accounts in effect on Jan. 31, 1969.