Wespath released a report confirming that its pension plan for clergy of the United Methodist is FULLY FUNDED.
In the Wespath report, you will see the graph below which shows the difference between the funding basis and the market basis. The funding basis is what is actually in the pension fund vs the actual liabilities. This is also what is billed to each church to cover the pension for their pastors.
The market basis is a hypothetical amount that assumes a very low return and would be used if every church were to leave the denomination. The market basis creates a very large unfunded pension liability whereas the actual fund is overfunded. Local churches are being demanded to pay according to the market basis. On page two of the report, Wespath provides the “discount rate” which shows us why the market basis is so much lower than what is actually funded. Wespath is assuming incredibly low returns on investments.
On page three of the report. Wespath established explains the funding basis and clearly states that the pension plans are fully funded. Thus, no church that is withdrawing from the UMC is putting anyone’s pension at risk.
In addition, on page 3, we also see the “discount rate” for the funding basis, which is more than double their assumption for the made-up market basis they are demanding from us.
It’s no wonder there is a huge gap between the market basis and the funding basis when you assume these wildly different returns.
Why does this matter?
All Conferences are demanding departing churches to pay for “unfunded pension” obligations claiming that millions of dollars are needed to maintain the connection. Some Bishops are telling local church leaders are Annual Conference events that they cannot allow local churches to leave without a payment of an amount – that they calculate and provide not provide any data or basis for the same – even though there is no unfunded pension liability. Even more egregious is that according to Wespath documents on their website (on page 6 of this document) Annual Conferences are free to use the pension payouts for whatever they like. So, a local church could pay their hypothetical pension payout demand and they may or may not even put those funds towards the pensions. It’s a shame this is information and not publicly available on the Wespath website and that Conferences are not transparent about the pension issue. Their lack of transparency is really astounding considering how many churches are thinking about leaving and don’t understand how their pension payouts are being calculated.
If your Conference, or Wespath, refuses to provide this information to you, please contact Daniel Dalton and we will send a copy of the Wespath report to you for your consideration.