The Board Bulletin – Fall 2013
After each regular meeting of the Board of Directors of The Board of Pensions of the Presbyterian Church (U.S.A.), Philadelphia, the Board of Pensions publishes The Board Bulletin, providing a record of actions taken at the meeting. ThisBoard Bulletin reports actions taken at the fall 2013 meeting, October 24-26, that affect plans and programs administered by the Board.
Board of Pensions staff provided the Healthcare Committee with an update on the implementation of the new pharmacy benefit manager. A contract with Catamaran, the nation’s fourth-largest pharmacy benefit manager, was approved by the Healthcare Committee at a specially convened meeting in August. Replacing Express Scripts, Catamaran will manage the Medical Plan’s prescription drug benefits, beginning January 1, 2014, for
active members of the Medical Plan of the Presbyterian Church (U.S.A.); and
retired members enrolled in the Medicare Supplement Plan.
The primary reason for the change is to improve service. The change will not increase expenses to the plan.
“We’ve heard from a number of members saying they welcome this change,” said Patricia M. Haines, Senior Vice President of Benefits. “Our goal is to make the transition as smooth as possible for our members with minimal, if any, disruption.” Members will see little or no change in the prescription drugs on the formulary and will have access to almost all of the same retail pharmacies as they do currently.
Staff reviewed the transition timeline:
In mid-November, plan members will receive the Board’s annual healthcare mailing, to include information about the move to Catamaran.
Beginning December 1, members will be able to call Catamaran’s Member Services Center and go online to check the formulary and price their medications for 2014. (The website information will be provided to all members on December 1.)
In mid-December, plan members will receive a welcome packet, including their prescription drug ID cards and further information about their coverage through Catamaran.
Starting January 1, 2014, members will be able to access their individual accounts online and use a mobile app to manage prescriptions with Catamaran.
“The Board looks forward to a positive partnership with Catamaran,” Ms. Haines added, “and to supporting our plan members, as together we make the transition to a new service provider for prescription drug benefits.”
This increase does not apply to former Affiliated Benefits Program participants who are enrolled in Medical Continuation. The directors, by past action, determined that this group’s dues should remain the same in 2014 as they are now in 2013. This information was reported in the summer 2013 issue of The Board Bulletin.
An increase also was approved for optional Dental Plan coverage dues. The Dental Plan, administered by Aetna and available to eligible active members of the Benefits Plan and their covered partners and children, will experience a dues increase of 6.5 percent for the PPO option and 2.9 percent for the DMO option. The same percentage increase in dues applies to all coverage categories. During annual enrollment, now underway, members can check the 2014 dental dues online through the Optional Dental Benefit Rate Checker on pensions.org.
These increases, which take effect January 1, 2014, are intended to keep pace with the claims experience for these populations.
The dues for retired members enrolled in the Medicare Supplement Plan will remain unchanged from 2013 to 2014: $218 per month for members and $436 per month for members and their Medicare-eligible covered partners. The Board of Pensions was able to maintain dues at the 2013 level largely because of the federal subsidies received through the Medicare Supplement Plan’s Prescription Drug Program, a qualified Medicare Part D plan.
The Healthcare Committee authorized the one-year renewal of the Board’s contract with International SOS, an organization that provides worldwide emergency medical assistance services to those covered by the Medical Plan traveling outside the United States. This coverage is available to active members and their covered dependents as well as those enrolled in the Medicare Supplement Plan.
The 11.3 percent return for the nine months ended September 30, 2013, exceeded the Balanced Investment Portfolio benchmark of 10.8 percent. The Balanced Investment Portfolio also exceeded benchmark returns for all asset classes while providing a socially screened portfolio that does not invest in companies on the General Assembly Divestment List, to include military, tobacco, alcohol, gaming, land mines, and handguns.
The Investment Committee discussed the September 30, 2013, asset allocation of 37.9 percent in U.S. stocks, 20.3 percent in international stocks, 29.7 percent in fixed income securities, and 12.1 percent in other assets. It affirmed current long-term strategic asset allocation ranges and the 7.0 percent actuarial interest return assumption for the Balanced Investment Portfolio.
Judith D. Freyer, Senior Vice President, Treasurer, and Chief Investment Officer, provided an update on the global markets for the first nine months of 2013. She compared expectations for markets as stated in January 2013 to current market conditions and investment opportunities for the balance of 2013.
The Committee heard a staff presentation on how the Investment team uses economic and market data in asset allocation meetings. Meetings are held monthly to review asset allocation and investment performance, rebalance the portfolio as necessary, and maintain adequate portfolio liquidity for the payment of benefits to plan members.
Ms. Freyer noted that the Pension and Death and Disability plans are mature plans. (A plan is considered mature when benefits paid exceed dues received.) Annual benefits paid from the Balanced Investment Portfolio have exceeded annual dues since 1988. Balanced Investment Portfolio assets were $2.1 billion on December 31, 1988, and $8.1 billion on September 30, 2013. From 1988 to 2012, the Balanced Investment Portfolio paid out $4.0 billion more in benefits to plan members than it received in dues.
The Pension Plan, Death and Disability Plan, Endowment Fund, and Assistance Program, as well as restricted gifts made to the Board of Pensions, all own units in the Balanced Investment Portfolio.
The Board of Directors approved the business plan for 2014, which lays out four Key Drivers. The drivers encompass the underlying initiatives for the Board of Pensions for the coming year and are mile markers for measuring Board progress throughout the 12 months.
The 2014 plan addresses the anticipated confirmation of a new President and Chief Executive of the Board, the continuing evaluation of the Medical Plan in a changing healthcare market, and collaborative efforts among agencies of the Presbyterian Church (U.S.A.). It also includes initiatives, under the Key Driver of Corporate Stewardship, that enable the Board to continue delivering quality service amid the changing needs of its membership, including the continued upgrade in information technology and security and ensuring the financial health of the Assistance Program.
The Directors also approved the administrative and capital expense budgets needed to carry out the work of the business plan.
Income Supplement Target Levels
$26,760 for single persons
$32,100 for members with covered partners
A target level is the maximum income a single person or member with a covered partner will have after an Income Supplement is added to all other sources of income. It is the most a member’s income will be after financial assistance from the Board is added.
Housing Supplement Maximum Income Levels
Retired plan members whose total retirement income falls below $39,450 a year may qualify for housing assistance if they meet certain eligibility guidelines.
Pastor Advisory Council II complements Pastor Advisory Council I, which primarily draws from larger churches and pastors with longer service. Council II consists of younger pastors, many of whom are under 40 and otherwise represent a cross section of the Church.
The Reverend Dr. John G. McFayden, Vice President, Church Relations, and Andrew J. Browne, Vice President and Corporate Secretary, are responsible for both councils’ work and their relationships with the Board.
Information about the expanded fund choices available to RSP participants will be communicated in second quarter 2014.