ELCA News Blog
October 9, 2009  

ELCA Board of Pensions annuity, bridge fund benefits reduced for 3 years

by John R. Brooks, ELCA News Service

The Board of Pensions of the Evangelical Lutheran Church in America (ELCA) sent letters to 12,500 plan members in its Participating Annuity and Bridge Fund, notifying them of reductions in their monthly annuity payments and the interest-crediting rate for non-annuitized funds.  The actions were taken Sept. 21 by trustees of the Board, which manages health and pension plans for ELCA professional leaders, other staff and their eligible spouses.

The downturn in investment markets in late 2008 and early 2009 resulted in a gap between the net assets in the Fund and projected lifetime obligations to members, John G. Kapanke, Board president, said in a report to the ELCA Conference of Bishops, which met Oct. 1-6 in Chicago. Effective Jan. 1, 2010, monthly annuity payments will be decreased by 9 percent, he said.  Kapanke said the Board anticipates monthly annuity payments will be decreased "by an additional 9 percent in 2011 and 2012."  The interest-crediting rate for the non-annuitized portion in the "bridge component" of the Fund will be cut 3.5 percent for each of three years beginning in 2010, Kapanke said.

"The annuity and bridge fund did suffer very significant losses, like many similar plans suffered, especially in the 4th quarter of 2008 and the first two months of 2009," Kapanke said. The result was a funding deficit of 26 percent as of Aug. 31, he said.  To ease the effect on plan members, the Board decided to implement the reductions over a three-year period instead of all at once, Kapanke said.  To answer questions about the reductions, Kapanke told the bishops, he hosted a series of conference calls for plan members.