Presbyterian Board of Pensions meets in Indianapolis

Highlights include Benefits Connect, fossil-free investing, measured growth

by Gregg Brekke | Presbyterian News Service

John Wimmer, Program Director in the Religion Division of Lilly Endowment Inc., speaks to the Board of Directors of the PC(USA) Board of Pension at their fall 2016 meeting. (Photo by Gregg Brekke)

INDIANAPOLIS – The Board of Directors for the Board of Pensions of the Presbyterian Church (U.S.A.) gathered here last week (October 26-29) for its fall meeting. New board members, approved by the 222nd General Assembly (2016) of the PC(USA), received orientation prior to committee and business sessions.

A total of seven new board members joined the 29 member body that selects and manages benefits for PC(USA) clergy and lay staff, and oversees investment strategies for pension funds and other financial savings programs available to subscribers. The Board of Pension currently manages $8.6 billion in total assets, a net increase of $383 million from September 30, 2015.

Guest speaker the Rev. John Wimmer, Program Director in the Religion Division of Lilly Endowment Inc., addressed the Board of Pensions’ plans for use of the $1 million grant as part of the National Initiative to Address Economic Challenges Facing Pastoral Leaders. The initiative supports a variety of religious organizations across the nation as they address the financial and economic struggles that can impair the ability of pastors to lead congregations effectively. The Board’s education and loan assistance programs rely heavily on curriculum—developed and to be developed—as a result of this funding.

Lisa Guzzardo, Vice President and Chief Information Officer, delivered news related to the rollout of the Employer Decision Support tool, which allows PC(USA) employers to design a benefits package for their employees, and Benefits Connect, the employee-side benefits administration site. Phase 2 of the project was completed prior to the fall enrollment period. Guzzardo noted one hundred percent of employers have configured benefits plans for employees and employee enrollment is well underway.

In addition to performance upgrades, the third phase of the project—to be deployed at the beginning of 2017—will introduce employee beneficiary, salary and contact information updates. Guzzardo reported the $7.1 million software development project would total $7.5 million due to “added vendor resources and time, primarily due to the complexity and performance issues in Phase 1.”

Approved by the Investment Committee, individual Retirement Savings Plan (RSP) participants will have access to fossil fuel-free global stock fund in the investment lineup of their 403(b)(9) plans effective January 1, 2017. In addition to being fossil fuel-free, the Pax Global Environmental Markets Fund Institutional Class (PGINX) proactively invests in companies worldwide that produce products or create solutions to drive positive performance in environmental sectors, including alternative energy, water infrastructure, waste management, sustainable food, agriculture and forestry.

Additionally, three new features—managed accounts, a brokerage window, and a loan feature—will be added to the Retirement Savings Plan effective January 1, 2017. The Investment Committee approved the addition of managed accounts through Strategic Advisors Inc., a Fidelity Investments company. Managed accounts will give participants access to experienced investment professionals to help create an appropriate investment strategy and actively manage an account portfolio based on personal circumstances, profiles and preferences. A brokerage window will help participants access investment options beyond those available in the plan today through Fidelity BrokerageLink. Participants can invest retirement savings in any mutual funds offered by Fidelity, just as they would invest in any other plan option, and transfer savings between the window and other funds. The loan provision allows participants to borrow from their RSP account balances and pay their accounts back. Loans are generally limited to the lesser of 50 percent of the account balance or $50,000 minus the participant’s highest loan balance in the past 12 months.

As global economic and market conditions and historically low global interest rates have dampened expectations for long-term investment returns for almost all asset classes, the Investment Committee recommended—and the Directors approved—a reduction in the expected long-term investment return for the portfolio, from 7 percent to 6 percent. Although the balanced portfolio returned 7.2 percent in the first nine months of 2016, the Board has moved toward a more conservative assumption for financial planning to ensure the long-term solvency of the Pension Plan, whose assets make up 90 percent of the portfolio.

“We would not be serving well if we continued to rely on a long-term investment assumption of 7 percent when all indicators are that we are simply not going to achieve that in today’s market environment, at least not without exposing the plan to untenable risk,” said Board of Pensions President Frank C. Spencer.

Judith D. Freyer, Executive Vice President and Chief Investment Officer, added, “It will be difficult to achieve a 7 percent long term investment return assumption without a substantial change to the balanced investment portfolio. It would reduce stability and liquidity.”

The Board of Directors approved new senior officer appointments to streamline the organization, which Spencer called “a significant step in efficiency and accountability.” They are:

Michael F. Fallon, Jr. – Executive Vice President and Chief Financial Officer
Judith D. Freyer – Executive Vice President and Chief Investment Officer
Patricia M. Haines – Executive Vice President and Chief Benefits Officer
John G. McFayden – Executive Vice President and Chief of Church Engagement
Susan Reimann – Executive Vice President and Chief Operating Officer

Additional senior staff appointments were approved, including:
Andrew J. Browne – Vice President, Church Relations
José R. Irizarry – Vice President, Education
Linda J. Jacobsen – Vice President, Growth Strategies and Solutions
Raymond Bonwell – Corporate Secretary

The full report of the actions from the Board of Pensions board meeting can be found at the Board of Pensions website.