Pension Liability Update for 2023

October 31, 2022

Board of Pensions and Health Benefits Establishes
Pension Liability Process for Disaffiliating Churches in 2023

To maintain parity among disaffiliating churches during a period of unprecedented market volatility, the Conference Board of Pension and Health Benefits established a threshold for applying designated funds to offset the net allocated pension liability. 

The Book of Discipline Paragraph 2553 calls for a local church that is disaffiliating to pay its share of the withdrawal liability. This has been incorporated into the North Georgia Conference disaffiliation process. 

The provision in 2553 recognizes that all the churches of the denomination are responsible for the adequate funding for pensions of clergy. This is a duty of care. Churches disaffiliating pay their present value allocated share of the liability upon exiting. 

Under Paragraph 2553, the Conference’s pension liability is determined by Wespath’s periodic evaluation of the UMC’s overall withdrawal liability calculation. Wespath calculates and updates each Conference’s withdrawal liability amount quarterly. Churches in the North Georgia Conference are allocated a share of the withdrawal liability using the apportionment allocation formula. 

Paragraph 2553.4(d) reads: The General Board of Pension and Health Benefits shall determine the aggregate funding obligations of the annual conference using market factors similar to a commercial annuity provider, from which the annual conference will determine the local church’s share.

This amount is posted quarterly in North Georgia Conference Data Services. In October 2022, the Conference Board of Pension and Health Benefits determined that for disaffiliating churches' withdrawal liability payments, the conference will offset the withdrawal liability only when the Conference pension liability exceeds 175 percent of previously designated reserve funds. Should the 175 percent threshold be reached in future quarters estimations from Wespath, the Conference will apply its reserve funds against the allocated pension liability. This too will be noted, if it is applicable, in Data Services. 

The Board of Pensions has chosen this prudent strategy due to volatility in stock market conditions, out of a sense of consistency between churches disaffiliating in 2022 and 2023, and to not unduly burden disaffiliating churches or those churches staying in The United Methodist Church. 

In an additional effort to maintain parity among churches holding church conferences between March and May, the pension valuation date has been set as January 1, 2023 for churches disaffiliating at Annual Conference 2023. This valuation will not fluctuate through the season of church conferences. This will allow churches to know the amount of their pension liability share well before a church conference. 

In summary:

  • The Board of Pension has chosen a strategy for calculating the pension liability of a disaffiliating church in 2023 that treats churches leaving in 2022 and 2023 equitably. 

  • This takes into consideration market volatility, fair treatment of disaffiliating churches, and is intended to avoid putting an undue burden on those staying in The United Methodist Church or those disaffiliating. 

  • The Pension Liability amount as of January 1, 2023, will be the set valuation of pension liability for churches disaffiliating in June 2023. This will mitigate against the fluidity of the market between those holding church conferences in March, April, and May 2023.