Caring For Those Who Serve Those Reaching Middle Age of their Ministry Mississippi Conference August 16, 2010 Presented by: Ron Coleman

2 On the Road to Retirement When should you retire?When should you retire? When do you want to receive your retirement benefits?When do you want to receive your retirement benefits? How much will you need?How much will you need? Which benefit options should you chooseWhich benefit options should you choose

3 On the Road to Retirement What are the retirement incomeWhat are the retirement incomesources? How to increase your pension?How to increase your pension? Where to get financial planning?Where to get financial planning? Find out if you’re on trackFind out if you’re on track

4 Overview Retirement ProvisionsRetirement Provisions Retirement PlansRetirement Plans LifeStage Investment Management Service (LifeStage)LifeStage Investment Management Service (LifeStage) Comprehensive Protection Plan (CPP)Comprehensive Protection Plan (CPP) Ernst & Young Financial Planning ServicesErnst & Young Financial Planning Services Pension ProjectionsPension Projections

5 Denominational Average Compensation (DAC) Average plan compensation of United Methodist clergy serving full-time appointmentsAverage plan compensation of United Methodist clergy serving full-time appointments 2010: $60, : $60, : $61, : $61,716

6 Conference Average Compensation (CAC) Average annual compensation of United Methodist clergy serving full-time appointments related to a specific conference Average annual compensation of United Methodist clergy serving full-time appointments related to a specific conference 2010 = $59, = $59, = $60, = $60,158

7 Mandatory retirement Age 72—effective January 1, 2009 Provisions for Retirement The Book of Discipline ¶358 Early Retirement Age 62 or 30 years of service—effective January 1, 2009 Normal Retirement Age 65 or 40 years of service 20-Year Retirement

8 Clergy Retirement Security Program (CRSP) 2007+CRSP Ministerial Pension Plan (MPP) Pre-82 Plan (Ministerial Reserve Pension Fund) United Methodist Personal Investment Plan (UMPIP) Retirement Plans Retirement Plans

9 Service before January 1, 1982Service before January 1, 1982 Pension credit—Yes or NoPension credit—Yes or No Annual conference is obligated to fund a pension for those yearsAnnual conference is obligated to fund a pension for those years Benefit = Life AnnuityBenefit = Life Annuity Pre-1982 Benefit

10 Pre–82: Benefit Paid for Life Married participants %Life with 75 % to surviving spouse (spouse at time of retirement) Single participant Single-life, no refund Benefit ceases upon participant’s death

11 Clergy Retirement Security Program (CRSP) 2007+CRSP Ministerial Pension Plan (MPP) Pre-82 Plan (Ministerial Reserve Pension Fund) United Methodist Personal Investment Plan (UMPIP) Retirement Plans Retirement Plans

12 Ministerial Pension Plan: 1982–2006 Benefit based on account balance and participant’s annuity selectionBenefit based on account balance and participant’s annuity selection Account balance invested until benefits beginAccount balance invested until benefits begin MPP account balance (including accumulated earnings) remains separate until distributed in retirementMPP account balance (including accumulated earnings) remains separate until distributed in retirement

13 Annuity A stream of paymentsA stream of payments Period certain (term) annuity = benefit paid over a guaranteed periodPeriod certain (term) annuity = benefit paid over a guaranteed period Life annuity = benefit paid for life (if joint = two lives)Life annuity = benefit paid for life (if joint = two lives) Reverend John Smith 1234 Nowhere Street Chicago, Illinois 12345

14 Application for benefitsApplication for benefits May leave on account until age 70½May leave on account until age 70½ One-time distribution of up to 35 % of accountOne-time distribution of up to 35 % of account “Annuitize” at least 65 % of account“Annuitize” at least 65 % of account 7 Annuity options7 Annuity options ■ 0, 50, 70,75,100% survivor ■ 0, 2-5 % annual increases Retirement Distributions: MPP (Post-1981)

15 Clergy Retirement Security Program (CRSP) 2007+CRSP Ministerial Pension Plan (MPP) Pre-82 Plan (Ministerial Reserve Pension Fund) United Methodist Personal Investment Plan (UMPIP) Retirement Plans Retirement Plans

16 Clergy Retirement Security Program (CRSP) A new retirement plan, effective January 1, 2007 providing a core benefit at retirement with two components

17 Clergy Retirement Security Program Defined Benefit (DB) Defined Contribution (DC) +

18 Defined Benefit Component Monthly payments, payable for life, calculated by multiplying the following and then dividing by 12: 1.25% DAC at time of retirement Years of credited service from January 1, 2007 Example for 2013 retirement.0125 x $65,000 (hypothetical DAC) x 6.5 years = $5,281 ÷ 12 = $440 per month

19 Defined Contribution Component Plan sponsor contribution of 3% of clergyperson’s plan compensationPlan sponsor contribution of 3% of clergyperson’s plan compensation Account balance invested as directed by participantAccount balance invested as directed by participant Available as cash distribution at retirement (or termination)Available as cash distribution at retirement (or termination) ■ Full lump sum ■ Partial lump sum ■ Cash installment (e.g., monthly)

20 Clergy Retirement Security Program (CRSP) 2007+CRSP Ministerial Pension Plan (MPP) Pre-82 Plan (Ministerial Reserve Pension Fund) United Methodist Personal Investment Plan (UMPIP) Retirement Plans Retirement Plans

21 UMPIP Sources Before-tax contributionsBefore-tax contributions After-tax contributionsAfter-tax contributions RolloversRollovers ■ 401(a) ■ 401(k) ■ 403(b) ■ IRA

22 UMPIP Access In-service withdrawalsIn-service withdrawals ■ Age 59½ Hardship loansHardship loans Hardship withdrawalsHardship withdrawals DisabilityDisability TerminationTermination RetirementRetirement

23 Benefit choicesBenefit choices ■ Full lump sum ■ Partial lump sum once per quarter ■ Cash Installments ■ Leave on account Flexibility to make changesFlexibility to make changes May pass on to heirsMay pass on to heirs UMPIP

24 Advantages of Investing Through the General Board Socially responsible investingSocially responsible investing Competitive returnsCompetitive returns Low expense ratiosLow expense ratios Access to LifeStage Investment Management ServiceAccess to LifeStage Investment Management Service Uphold the values of The United Methodist ChurchUphold the values of The United Methodist Church

25 Investment Options SVF IPF FIF MAF USEF IEF BSVPF Stable Value Fund Inflation Protection Fund Fixed Income Fund Multiple Asset Fund Balanced Social Value Plus Fund U.S. Equity Fund International Equity Fund Risk Return Potential

26 UMPIP Unitized Funds Expense Ratio Comparison 238Short-Term Bond Funds 119InflationProtectionFunds 1,151Short,Intermediate, And Long-Term Bond Funds 753 Funds with BalancedObjective 1,773Multi-Asset Class Funds 1,417 Growth and IncomeFunds 413 Foreign Stock Funds Funds SVFIPFFIFBSVPMAFUSEFIEF Source: Wilshire Compass and Lipper as of 03/31/09

27 General Board Competitive Returns Year-to-date July 23, % 1.8% SVF IPF FIF MAF BSVPF USEF IEF 5.9% 2.0% 1.4% -1.6% 2.6 %

28 LifeStage Investment Management Service (LifeStage) LifeStage Investment Management Service (LifeStage)—managed accounts

29 LifeStage Creates a customized investment portfolio for youCreates a customized investment portfolio for you Reviews asset allocation annuallyReviews asset allocation annually Rebalances your account as neededRebalances your account as needed Allows you to focus on other thingsAllows you to focus on other things Benefits:

30 LifeStage: Fund Selection Feature Risk Tolerance Age GBOPHB Account Balances Value of Social Security Benefits Age at Retirement Social Security Eligibility ▪ Fixed Income Fund ▪ Inflation Protection Fund ▪ U. S. Equity Fund ▪ International Equity Fund ▪ Stable Value Fund Target Fund Allocation

31 LifeStage: Rebalancing Feature Before Actual Fund AllocationsAfter Actual Fund Allocations No participant intervention required ▪ Fixed Income Fund ▪ Inflation Protection Fund ▪ U. S. Equity Fund ▪ International Equity Fund ▪ Stable Value Fund 13% 34% 14% 26% 14% 29% 17% 27% 13% ▪ Fixed Income Fund ▪ Inflation Protection Fund ▪ U. S. Equity Fund ▪ International Equity Fund ▪ Stable Value Fund

32 LifeStage MPPx CRSP 3%x UMPIP—personal contributionsx OptionalRequired

33 Comprehensive Protection Plan Death and Disability

34 CPP Retirement Eligibility Eligible to receive a benefit from CRSPEligible to receive a benefit from CRSP ■ Two consecutive years preceding retirement ■ At least five of the 10 years immediately preceding retirement or 25 years January 1, 2009

35 CPP Death Benefits 2010 Active:$50,000 Retired:30% of DAC ($18,102) Spouse:20% of DAC ($12,068) Surviving spouse:15% of DAC ($ 9,051) Child:10% of DAC ($ 6,034)

36 Ernst & Young Financial Planning Services Financial Planning

37 Consultation Topics Creating a retirement planCreating a retirement plan Choosing retirement plan investmentsChoosing retirement plan investments Buying a homeBuying a home Developing an estate planDeveloping an estate plan Managing debtManaging debt Funding children’s educationFunding children’s education Evaluating insurance needs and optionsEvaluating insurance needs and options

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www.gbophb.org

42 Hebrews 11:7 “ By faith Noah, being warned by God concerning events as yet unseen, took heed and constructed an ark for the saving of his household….”