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GuideStone, state convens. to share retirement protection costs

DALLAS (BP)–Recent economic conditions have prompted changes in the protection section of GuideStone Financial Resources’ church retirement plan, the Southern Baptist entity announced May 24.

Beginning Jan. 1, 2007, state Baptist conventions gradually will begin sharing the costs of the protection provisions, encompassing disability and death benefits, according to a GuideStone news release May 24.

The current monthly cost for the protection coverage is $24.50; in January, state conventions will pay one-tenth of the program cost ($2.45 per participant), GuideStone reported, with future increases dependent on market conditions over the next several years.

Curt Sharp, GuideStone’s executive officer for denominational and public relations, said in the news release, “While calendar years 2003-05 were positive years for plan investments, the Protection Section Benefit Fund, like other funds, is still recovering from the adverse market conditions experienced in 2000-02. Most investment experts believe it is highly unlikely that we will experience the level of investment returns we enjoyed in the 1990s anytime in the foreseeable future.”

GuideStone President O.S. Hawkins recounted in the news release that discussions with the state conventions began several years ago concerning “the need to begin phasing in the state convention contributions for Protection Section survivor and disability benefits to facilitate the long-term viability of the program. We are grateful that the economy and our investment experience allowed us to absorb these costs for 14 years, and in many cases the savings enabled our state conventions to put more money into other ministries.”

From 1978-93, state conventions paid the protection section contributions and, in 1988, they also began making matching retirement contributions on behalf of eligible participants in their states.

Then in 1993, GuideStone assumed the funding of the protection provisions for the state conventions through financial assistance and, beginning in 1995, through a billing credit system that provided the state conventions an estimated savings of more than $126 million.

Rick Lance, executive director of the Alabama Baptist State Convention and president of the Fellowship of State Executive Directors, was quoted in the GuideStone news release as saying, “Through the years state conventions have enjoyed excellent working relationships with GuideStone Financial Resources, formerly the Annuity Board. The revised cooperative agreements, which begin in January, give us an opportunity to look to the future with a sound financial foundation so that together we can serve those who serve the Lord.”

Since the implementation of the billing credits in 1993, the GuideStone news release noted, the future funding status of the Protection Section Benefit Fund has been regularly evaluated. “When we project forward, the underlying assets are no longer sufficient to provide these billing credits indefinitely,” said Terry R. Wade, director of GuideStone’s actuarial services. “To ensure the long-term viability of the fund it became necessary to ask the state conventions to provide a portion of support for the protection benefits enjoyed by more than 50,000 participants.

“By phasing in the state convention contributions, we can reach equilibrium with the earnings of the funds, along with the state convention contributions, that will finance these benefits indefinitely,” Wade added.

With the sharing of the protection benefit costs, state conventions are evaluating another retirement plan benefit –- the matching retirement contributions of up to $17.50 provided for eligible retirement participants monthly.

Currently, some state conventions make retirement matching contributions for all eligible ministers and non-ministerial employees. Other state conventions make retirement matching contributions only for ministers.

In order to lessen the potential impact of the phased funding of the protection provisions to the state conventions’ budgets, GuideStone has offered three alternatives for the state convention retirement matching contributions:

— Option 1: The state convention may provide matching retirement contributions for ministers and other eligible non-ministerial participants.

— Option 2: The state convention may provide matching retirement contributions for ministers only.

— Option 3: The state convention may provide no matching retirement contributions for any participant.

GuideStone has asked each of the state conventions to select an option no later than Sept. 1 so provisions can be in place by Jan. 1.

State conventions also may control their protection section costs by requiring that eligible non-ministerial employees work at least 20 hours per week and have been employed in some Southern Baptist church or entity for at least three years. In addition, state conventions may exclude church school and daycare employees from the protection section and matching retirement contributions.

“The options provided by GuideStone offer some flexibility for the state conventions as they seek to assist church and associational staff in planning for their retirement needs,” Lance said.

Since 1997, GuideStone has paid out more than $29.3 million in disability benefits to more than 1,450 retirement participants who were no longer able to work.

An additional $34.6 million was paid in death benefits to 1,352 families of participants who died while active in the church retirement plan.

The protection section, described by GuideStone as an often-overlooked feature of the church retirement plan, provides eligible participants a disability benefit up to $500 per month and a survivor death benefit up to $100,000 at no cost to the participant or the local church.

“We know of no other retirement plan for ministers and churches that provides this type of protection and assistance at absolutely no cost to the participant or the church,” Hawkins said, noting that GuideStone has “enjoyed this cooperative partnership for years” with the state conventions.

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