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Retirement, healthcare challenges recounted by Annuity Board exec

NASHVILLE, Tenn. (BP)–The Annuity Board of the Southern Baptist Convention is experiencing “some of the best times in the midst of some of the worst of times,” board President O.S. Hawkins told the SBC Executive Committee Sept. 16, acknowledging his paraphrase of Dickens.

“These are challenging times, obviously, for us. We have a national economy that is continuing to go south. We have markets that are bear markets now. We’re struggling to recover, and it looks like it might be a little longer than some people thought it might be.”

And, Hawkins said, “We’re in the midst of a medical insurance crisis that’s affecting everybody across this country.”

The Annuity Board, he noted, is different than other SBC entities which have a primary focus on “getting the message of Jesus Christ out” through missions and ministry.

“Our primary focus,” he said, “is on the messenger, that pastor, that church worker, that messenger of Jesus Christ.”

In the Annuity Board’s retirement plans, Hawkins said, “we obviously can’t control what happens with the stock markets, but what we can seek to control is what happens with our own investment funds.”

The 13 retirement/investment funds offered by the board are “measured against certain benchmarks, not benchmarks that we arbitrarily decide, but against benchmarks in the industry,” Hawkins said. “In the midst of a difficult time in these markets through the first two quarters of this year,” he reported, “of our 13 funds, over half of them have exceeded their respective benchmarks.”

Currently, Hawkins acknowledged, “It’s not very encouraging for the pastors who have seen their retirement funds decrease” over the months.

But, he said, the good news so far in 2002 is “mainly because of our style,” which is both “multi-asset,” encompassing the 13 different funds, and “multi-management,” with a “multi-style” approach among fund managers, “to help diversify our people’s funds, and we’re finding out that that’s working very successfully.”

“The big picture,” Hawkins added, “is that history is on our side … [and] we know that sooner or later they’re going to come back.”

An unusual development so far this year is a 12 percent increase over last year in retirement contributions, Hawkins said, attributing the upswing to expanding marketing efforts by the board among potential participants.

The Annuity Board’s health insurance programs, meanwhile, are “our biggest challenge right now,” Hawkins reported. “… We’ve got an industry that’s out of control.” Among the problems, he said, are soaring prescription drug prices.

The board receives no Cooperative Program funds “to help supplement this program for our pastors,” Hawkins stated. “I’m not suggesting that we should [receive SBC funds] but just reminding you there’s nothing there to subsidize” increased healthcare costs. “We have a large asset base at the Annuity Board, but we’re just stewards of scores of thousands of pastors’ retirement accounts, and obviously we would not use those to help supplement the insurance program, so it comes down to the sheer fact of … claims paid out versus premiums received.

Denominational governance can make a difference for some church-based health insurance programs, Hawkins said. “The Methodist church, for example, can mandate that all of their churches across the nation be a part of their insurance program, and it helps diversify the risk that’s out there. But our very ecclesiology of local church autonomy works against that for us,” along with the fact “that many of our churches are very small.”

“And I know so many young pastors … whose wives are working — the first time this has happened on this scale in Southern Baptist life. Many of [the wives] work for corporations where they get insurance packages … .”

Hawkins also stated, “One-half of the claims we paid out in the insurance program last year were paid out for what are called ‘preventable diseases.’ In other words, by and large, our folks aren’t nearly as healthy as they ought to be. And half of what we paid out in claims, we paid out to people who, at an industry standard, [had] preventable diseases.”

The Annuity Board is taking “a three-pronged approach,” Hawkins said, to counter rising healthcare costs:

— The board will add a “level 4” insurance option with higher deductibles, beginning Jan. 4, in which, for example, a premium just over $450 can be chosen that with lower deductibles would cost more than $800. The board also will make “a change with our third-party administrator” for claims by Jan. 1, Hawkins said. The current company has “not met our excellent standards and, in some ways, our integrity standards,” he said. “We’re making a renewed emphasis with LifeWay [Christian Resources] and others with a wellness program,” he added. The board is “trying to do everything we can to make [healthcare] affordable for our pastors,” he said.

— “I’ll tell you a second person who has to take responsibility,” Hawkins said, “and that’s the participant. If half our claims were paid out for preventable diseases, we’ve got to get our people healthy.” Citing health screenings offered at the Southern Baptist Convention annual meetings each June, Hawkins said it is “frightening the physical condition of many of the folks we’re serving. We’ve got to get our folks in wellness programs. It’s a win-win for them; they’re going to feel better in ministry. It’s a win-win for their church; they’re going to be healthier and active and better able to serve their church. It’s certainly a win-win program for the insurance department. It’s a win-win for their families. We have to, as participants, take seriously this issue of wellness.” Hawkins also said, “We’ve got to look to generic drugs as alternatives more and more and more to try to save in that area. And then we’ve got to continue to ask questions. Not all, but a few doctors … are paying insurance premiums that are astronomical … so it’s a very easy thing to give a lot of tests for somebody that may not need all of them if an insurance company is paying for them. We’ve got to ask some right kind of questions, quite honestly, when we go to the doctor.”

— Churches, meanwhile, should separate benefit packages from their pastors’ salaries, Hawkins said. “So many churches just give a pastor a lump sum and say, ‘Do with this what you want to.’ By the time he pays his insurance out of it and his retirement … he doesn’t have hardly anything to live on … .” If insurance benefits are separated from a $40,000 salary, for example, the result can be a $2,000 reduction in taxes, Hawkins said.

“Also, our two most-used drugs by our pastors and church workers last year, the first one was for stress-related issues — gastric, ulcer-type, stress-related issues — and the second was for depression,” Hawkins said. “Our pastors and church workers are under a tremendous amount of stress in our churches, and our local churches need to see this and reach out to our workers in a way that’s going to be productive for them.”

In the Annuity Board’s efforts to assist some 9,000 needy retirees and widows who receive $200 a month or less in retirement benefits, Hawkins reported that the Adopt an Annuitant Program has expanded from a $75 supplement to $265 as a result of increased fundraising efforts. “It’s a tremendous added help to those folks that we’re so privileged to serve,” Hawkins said.

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