Retirement Protection Benefits Offer Assistance to Those in Need

May 24, 2006

DALLAS — The numbers tell a quiet and moving story of lives touched during difficult times through participation in GuideStone’s church retirement plan.

• Since 1997, GuideStone Financial Resources has paid out more than $29.3 million in disability benefits to over 1,454 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.

These financial payments came from the Protection Section, an often overlooked feature of the church retirement plan that 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,” said GuideStone President O.S. Hawkins. “GuideStone works in concert with the state conventions to provide these benefits and we have enjoyed this cooperative partnership for years.”

“State conventions initially funded the protection benefits in 1978 for qualifying members of the Southern Baptist Protection Program Church Annuity Plan,” said Curtis D. Sharp, GuideStone executive officer for denominational and public relations. “The retirement plan was significantly modified by the state conventions and GuideStone in January of 1988 when the current Protection Section program was adopted.”

From 1978 until 1993, each state convention paid Protection Section contributions and beginning in 1988 also made matching retirement contributions on behalf of eligible participants in its state.

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 has saved the state conventions more than $126 million.

Due to recent economic conditions, the time has come for changes in financially supporting the protection benefits.

“While calendar years 2003-2005 were positive years for plan investments, the Protection Section Benefit Fund, like other funds, is still recovering from the adverse market conditions experienced in 2000-2002. 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,” Sharp said.
 
Beginning Jan. 1, 2007, state Baptist conventions will gradually begin sharing the costs with GuideStone in funding the protection provisions. The current monthly cost for the protection coverage is $24.50 and in January, state conventions will pay one-tenth of the program cost ($2.45 per participant).

The sharing of costs of the protection coverage with GuideStone is a “phased-in” approach. The state convention’s portion will increase over the next several years.

“We have been discussing with the state conventions for several years 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,” Hawkins said. “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.”

“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,” said Dr. Rick Lance, executive director of the Alabama Baptist State Convention and president of the Fellowship of State Executive Directors.

Since the implementation of the billing credits in 1993, GuideStone has continually evaluated the future funding status of the Protection Section Benefit Fund. Since 2003, GuideStone and the state conventions have discussed the possible sharing of costs for the Protection Section.  In 2005, GuideStone offered the “phased-in” contribution approach to the state executive directors.

“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 currently 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, 2006, so provisions can be in place by Jan. 1, 2007.

State conventions also may control their Protection Section costs by requiring that eligible non-ministerial employees must 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 day care 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.