June 29, 2009
ELCIC Group Services Inc. (GSI) announced it will pay off a $16-million deficit in the church’s Pension Plan Retired Benefit Account five years early, thanks to a sound investment strategy that’s weathering the current economic downturn. The news was delivered to thunderous applause by GSI board chair John Wolff as he presented the Report of ELCIC GSI to delegates, special guests, and visitors attending the Twelfth Biennial National Convention June 25–28 at the University of British Columbia, Vancouver.
“As of today, we have a remaining unfunded liability of $5.6 million, and the benefit plan is 90 per cent funded,” said Wolff. The remainder of the deficit is expected to be eliminated by 2013 instead of the initial deadline of 2018.
The GSI board has instituted a number of strategies to help preserve the retirement income of ELCIC pastors after market losses in 2001 and 2002 put the account into a deficit position. Among those early strategies was asking congregations to contribute an additional 4 per cent of their employees’ salaries.
“We know it hasn’t been easy, and we know that struggling congregations have stepped up to meet the obligations,” said Wolff. “It’s nice to know that as a community, we are prepared to support our retired pastors. It sends a great message.”
The market loss in 2002 was followed by a drop in the valuation rates, increasing the deficit, but several years of good investment returns brought the plan ahead of schedule, spurring the Board to “immunize” the portfolio in 2007 by buying fixed bonds that protect the plan from market volatility.
“Doing so virtually eliminates the future market risk in the Retired Benefit Account and pushed us three years ahead of schedule,” said Wolff. “Had we not made this change, the recent economic downturn would have driven the liability up to $18 million. In hindsight, it was a fortuitous change in strategy.”
Despite the past year’s market challenges, GSI found more opportunity to make some gains. The corporation had several large insurance companies bidding above annuity rates to get its business. And the board of directors decided about a month ago to sell 90 per cent of annuity obligations to Sun Life Financial. “We were able to do that at an above-market rate. As a result, we know what’s left to pay and how long it will take, and we no longer need the letter of credit we put in place two years ago,” said Wolff.
During a question and answer period, Rev. Jason Anderson from Christ Trinity Lutheran Church in Lethbridge, Alta., offered a personal word of thanks for the prudent administration of the benefits and retirement income programs. “I lost my wife in November, and I couldn’t be a pastor if it wasn’t for this ministry,” Pastor Anderson said. “Thank you for what you do.”
Over 400 Lutherans met in Vancouver at the ELCIC's 2009 National Convention from June 25-28. Full agenda details and highlights available on the National Convention website: http://elcic.ca/In-Convention/2009-Vancouver/default.cfm
The Evangelical Lutheran Church in Canada is Canada's largest Lutheran denomination with 162,100 baptized members in 611 congregations. It is a member of the Lutheran World Federation, the Canadian Council of Churches and the World Council of Churches.
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