Frequently Asked Questions about P&B – Part 2

Written by Kevin P. Gilmore
From the Director

from-the-director-07-22_article.jpgThis is part two of the column I began in our last issue in which I address some of the significant questions I have been asked in recent days.

1. Will my P&B-provided retirement benefits and Social Security be enough for a sound retirement?
No, they will not. The answer is not “maybe” or “sort of.” The answer is an emphatic “NO!” Social Security, the Basic Pension, and 403(b) APS contributions, were never intended to replace an active salary in retirement. Rather, they are provided to supplement the personal savings activities of ministers—with support from their local church employer.

It would be difficult for an individual to match the efficiency, buying power, and low-cost structure of benefits offered through our plans.

2. Is P&B working on improving benefits?
Yes! The extra pension and APS payments to retired and active ministers earlier this year are part of an ongoing effort. While it is unlikely we will change the pension benefit formula in the near future, due to its high cost and negative impact on funded status, we will continue to evaluate the potential for “extra” payments. Regarding the 403(b) plan, we are currently evaluating a restructure of the APS program to better leverage and incentivize participants—and their church employers—who are proactive in directly contributing towards the pastor’s retirement beyond supporting the P&B Fund. We plan to bring a series of recommendations to the Board of Pensions at its October meeting for consideration. Stay tuned.

3. Why Pensions and Benefits? Can’t I just do this on my own?
You can always try it on your own, but P&B was created over 100 years ago to do what we in the church do so well: join together to address needs in our community. It would be difficult for an individual to match the efficiency, buying power, and low-cost structure of benefits offered through our plans. When we go to market to find a vendor or service, we are able to leverage the buying power of more than 20,000 participant accounts. For instance, according to an independent consultant, the fees associated with our 403(b) plan are among the lowest in the industry. So, what did we do? This year, we acted to lower them even more by eliminating the $39 annual administrative fee. Beyond this, we are actively involved with faith-based peers in national benefit associations to learn and share about common challenges and solutions. The bottom line is P&B brings the value of large institutional-level professionals and services a local church could not obtain on their own. While we are not licensed financial advisors, we provide 403(b) participants with direct access to professional advisors to assist as much as you prefer. I have the privilege of working with a great team of dedicated people who care about our participants and are also available to speak with you about benefits and services, such as life and long-term disability insurance, retirement, taxes, compensation, or other financial matters that affect pastors and churches. We believe deeply in our mission of serving those who serve.

If you have other questions, or if we may be of service to you, contact us at 888-888-4656, or speak with a Fidelity representative at 866-629-2736.

Kevin P. Gilmore is executive director of Pensions and Benefits USA for the Church of the Nazarene.