It is rare for me to address the same issue three times in a single year. However, in response to my previous articles (June and July 1998), a former denominational financial officer, well-versed in retirement issues and policies, shared the following observations about the proposed changes in the NAD retirement plan and the scheduled vote for implementation at the upcoming NAD year-end meeting.
The Defined Contribution plan
Many organizations have shifted from a Defined Benefit (DB) plan to a Defined Contribution (DC) plan. The reason for the shift is clear: the DB plan obligates the employer to make retirement payments at a specific amount for as long as the retired employee lives. The DC plan only obligates the employer to make specific contributions into a retirement fund during the time the individual works for the organization. The organization does not guarantee how much the employee will receive during retirement or what will happen if the employee lives beyond the time when his/her fund is depleted.
In the new DC plan, the amount which the employee will receive depends on the number of years worked, investment options given to the employee, investment decisions made by the employee, and other economic factors.
Most DC plans assume that working employees have significant personal funds which they will personally contribute along with the organization's contribution. Pastoral salaries do not allow for such significant contributions or perhaps even for the modest personal contributions required by the proposed DC plan in order for employees to receive a full contribution by the denomination.
The advantage to the employer is obvious. Once the employee retires, the employing organization has no further financial obligations to the retired employee. When the amount that has been contributed is fully expended, the retired employee is without income.
Retiree benefits and spouse allowances
Two additional, significant changes in the proposed DC plan for the United States portion of NAD involve medical coverage and spouse allowance for retirees. Note the impact if these observations are accurate.
The denomination will no longer provide retirees' medical benefits as we understand them. Instead, the new plan envisions making supplemental payment to the retiree, which should enable retired workers to obtain insurance through Adventist Risk Management (ARM) or another insurance carrier. Again, the advantage to the employer is obvious reduced obligation in connection with health coverage.
If this is accurate (and the plan is not yet completely designed), the retired worker will have to find a carrier willing to provide coverage at an affordable rate. Also, should the retired worker need to change carriers, the question remains whether the new carrier will accept the retiree with existing medical conditions or apply certain limitations? However, the anticipated design provides that retirees will always have the choice to remain with a product sold by ARM. The retired worker takes on much greater responsibility for health coverage decisions under the new plan.
Spouse allowance is eliminated in the new plan. The current DB plan provides for a spouse allowance and recognizes that pastoral spouses (usually women) have often helped the employed spouse (often the husband working as a pastor) in the work of ministry. Pastoral spouses are the single largest group of volunteers serving the church in North America. Even pastors' spouses who are employed in other lines of work give many hours of volunteer service to God's cause each week.
Only those who have worked as pastoral teams really understand how much work the "unemployed" spouse does for the ministry of the one who is paid. Those who have never been in this situation do not comprehend the expectations and demands placed upon pastoral families for active participation by the spouse in ministerial functions. Sometimes lip service is given to their contribution, but those who have designed the new DC plan have stated, "pastoral spouses are not recognized in the DC plan."
Some have concluded that a spouse allowance cannot be legally included in the new plan. However, this is only a technical issue for which a plan could be established to protect the promise made to pastoral families for so many years. In fact, Canada is making just such a provision in its retirement plan. If we cannot include the spouse allowance under the new plan, then we need to implement a parallel policy (not merely a recommendation but a mandated policy) which will make provision for the spouse allowance.
Our denomination is already out of harmony with Ellen G. White's counsel requiring that spouses who are coworkers with their husbands to receive remuneration. If we remove the spouse allowance which has been promised for so many decades to workers who are currently serving faithfully, we will further violate this counsel.
Pastoral workers and denominational leaders should join together to urge delay in implementation of the new plan until these issues are thoroughly discussed and alternative solutions are found. This is neither a financial nor legal issue alone. This is a moral issue of remaining faithful to a long-established promise made to pastoral employees.