Changes ahead for BIC Pension Fund
GRANTHAM, Pa. (Dec. 22, 2009)—Effective January 1, 2010, the defined benefit (DB) portion of the Brethren in Christ Pension Fund will be frozen, thereby ending pension accruals for current participants as well as pastors and missionaries who may serve with the denomination in the future. Concurrent with the freeze, the existing TSA portion of the plan will be spun off as a new plan.
These actions, which were approved by the General Conference Board at their October meeting, are the first steps in a multi-year plan for addressing the significant underfunding in the DB plan. The goal is to make it possible for the BIC Church to honor all existing commitments and obligations to pensioners, provide a more attractive retirement plan for its U.S. pastors and missionaries, and reduce the exposure and liability for the denomination to a manageable level.
The decision to freeze the DB plan will not affect any retiree who is already receiving benefits through the Pension Fund. Benefits that have been earned through December 31, 2009, will still be available, although no additional benefit will be accrued. In addition, no participants will be added to the DB plan after December 31. Going forward, pastors who are new to the BIC Church will participate in the TSA plan only.
Pastors and missionaries were notified of the change in the pension fund by mail this past week. They also received information about the two options available to them with regard to the DB plan—to remain in the frozen plan or to opt out of the DB plan and continue with a TSA only.
“When the BIC Pension Fund was introduced in the early 1960s, defined benefit plans were the only option and at the time, were a good deal for employees. But a DB plan was never intended to be the whole of an individual’s retirement planning,” states Rebekah Basinger, executive director for congregational relations. “There was always the expectation that individuals would augment the DB plan with other savings and investments.”
Individual retirement accounts were added to the denomination’s pension plan in the late 1980s, and a majority of churches and pastors took advantage of the option. Going forward, except for those pastors who choose to remain in the DB plan, 100 percent of the allocation by the local church into their pastor’s retirement fund will be directed to his or her TSA account. Churches are strongly encouraged to allocate a full 10 percent of the pastor’s total compensation to the Pension Fund.
Additional details about the changes in the BIC Pension Fund can be found at bic-church.org.