DALLAS (BP)–Trustees of the Southern Baptist Convention Annuity Board heard reports on the agency’s retirement and insurance programs during their Feb. 28-29 regular meeting in Dallas, along with a report on favorable action by the SBC Executive Committee on recommendations that include expansion of the Board’s ministry assignments.
If approved at the SBC annual meeting in June in Orlando, Fla., the Annuity Board will expand its services to include personal investing for participants and their spouses and institutional investment management services in cooperation with Baptist foundations.
“Underlying the proposed expansion of our ministry assignments is the strong desire to enhance the financial security of those we serve,” said O.S. Hawkins, the Annuity Board’s president and chief executive officer. “Our participants are looking for ways to enhance their retirement options and consolidate their assets under one provider.”
In the retirement area, the Church Annuity Plan had 46,280 persons from 22,865 churches in active billing status Dec. 31, and another 39,280 institutional and agency employees had active retirement accounts. Participant contributions of $315,183,458 represent an 8.4 percent increase over 1998.
Benefit payments and withdrawals in 1999 totaled $372 million. Applications were processed for 2,617 persons who elected a funded benefit. At year’s end, there were 31,512 benefit recipients.
Board Treasurer Jeffrey P. Billinger reported total assets were $8 billion at Dec. 31, 1999, compared to $7.1 billion at Dec. 31, 1998. The net income for 1999 was $960 million, the highest annual net income ever reported by the board. This compared to $825 million net income for 1998.
“We have closed the 82nd year of the Annuity Board operations with thanksgiving for past blessings and anticipation of new opportunities as we enter a new millennium,” Hawkins said.
The insurance update to trustees included an announcement of rate increases and a new pricing schedule for prescription drugs effective July 1 for participants in the Personal Security Program.
Participants in the Comprehensive Medical Plan, AB(c)POS Plan and the Catastrophic Medical Plan will receive a 5 percent increase. Medicare participants will receive a 25 percent increase.
No increases were announced, however, for the Employer Security Program encompassing churches and Baptist organizations with 10 or more employees.
“The rate increase for Medicare participants reflects the higher use of prescription medication and the escalating costs of these drugs,” said Doug Day, managing director of insurance services. “Recent statistics show persons over age 65 comprise about 12 percent of the general population, but account for one-third of total prescription drug expenditures.”
A new three-tier pricing schedule will be introduced for both retail and mail service prescription drugs. Currently, the Annuity Board uses a two-tier approach for generic and brand drugs. The three-tier pricing schedule means the more expensive brand-name medications will have a higher copay beginning July 1.
“In the past seven years, prescription drugs have increased over 100 percent in costs, but the Annuity Board has not passed this cost on to our participants. However, the time has come to make some adjustments in our pharmacy program and we believe the three-tier option is the best one available. It mirrors what is being done in managed care programs nationwide,” Day said.
“The Annuity Board continues in its commitment to explore additional ways to manage costs and serve our participants,” Day added.
To help in this endeavor, the board retained William M. Mercer Inc., the world’s largest insurance consulting firm. “This relationship will enhance the continuing development of plans and products and will provide a great resource in establishing a long-term strategic plan,” Day said.
In other business, Richard M. Hart, executive officer for systems and technology, reported a successful transition to year 2000 (Y2K) and praised the cooperative efforts of the staff. “Y2K was a non-event due to the outstanding teamwork of numerous staff in 16 departments,” Hart said.
A record total of $5,039,861 was distributed through the Board’s relief program to needy retired ministers and their widowed spouses. The amount received from the Southern Baptist Convention Cooperative Program and special designations totaled $1,221,385. The entire Cooperative Program allocation for the Annuity Board and special designations is spent in relief ministry without any expense applied. The board’s Retired Ministers’ Support fund supplements the convention allocation. A significant number of persons on relief receive no regular retirement annuity because their churches never enrolled them in the Church Annuity Plan.
At year’s end, there were 874 persons receiving supplemental assistance grants, and 2,599 received the $75 Adopt An Annuitant benefit. The increased monthly payments of $75 (from $50) for Adopt An Annuitant recipients began Jan. 1, 1998. The increase in this benefit was the first since the program was implemented in 1981.
The trustee relief committee considered 47 relief requests. They approved 20 two-year monthly grants, one three-month monthly grant, one six-month monthly grant, one one-time grant and seven two-year expense grants. Seventeen individuals were declined for being outside guidelines. Fourteen individuals were added to the Adopt An Annuitant roll.
All executive officers were re-elected. Annuity Board bylaws require annual election of both general (trustee) officers and executive officers. Jeffrey P. Billinger, executive officer and treasurer was named chief financial officer.
Trustees accepted the recommendation of their general officers nominating committee and elected George Tous van Nijkerk of North Carolina to a one-year term as chairman, and Alton Fannin of Oklahoma to a one-year term as vice chairman.
At the Monday evening dinner meeting, four trustees were honored for their years of service to the board: Michael A. Moot, Colorado; J. Ray Taylor, local-Texas; S. Glenn Weekley, Tennessee; and Donald H. Wills, local-Texas. Timothy E. Head of South Carolina also was recognized for his three years of service as chairman of the board.
The next scheduled meeting of the board’s trustees is July 31-Aug. 1 in San Diego, Calif.