MINNEAPOLIS - The Board of Pensions of the Evangelical Lutheran Church in America will offer a simpler, expanded pension plan on Jan. 1 to pastors and lay employees across the country.
The church is bringing its plan into the 21st century with more investment options (none of them mutual funds), daily valuation from a new outside record keeper, and improved education and communication. Employees expect a pension plan that's flexible, simple to understand, and has a high level of service that is competitive with the retirement plans of other organizations, said David G. Adams, vice president of research and design. And they want Internet access to their accounts.
"We used to get nice requests by e-mail, wondering when members might get Internet access. Those e-mails have turned into demands," Mr. Adams said.
For the sake of simplicity and streamlining operations, the $4.2 billion Regular Pension Plan, a 403(b) plan for employer contributions, will be combined with the $200 million Optional Plan for employee contributions, said Pastor Ronald T. Glusenkamp, vice president of customer outreach.
The two plans, both employee directed, now have different investment options. But that will change in January.
The Regular Plan offers seven separately managed accounts, handled mostly by external managers, and the optional plan offers five mutual funds, four from The Vanguard Group of Investment Cos., and one from Calvert Asset Management Co. Inc..
Mr. Adams said staff determined that a much wider range of investment options was necessary to make the plan more competitive. The combined plan will offer 20 daily-valued options, including 14 single-asset-class separate accounts, some with multiple managers. Assets invested in the Optional Plan's existing mutual funds will be moved automatically into similar separate account options in the new plan, unless members specify otherwise.
Existing separate account managers will be retained, some with more specialized assignments, said Mr. Adams. The plan no longer will offer public mutual funds. Vanguard will continue to manage a money market option and Calvert will be terminated.
The global stock fund and a social purpose version of the portfolio will be managed by Barclays Global Investors NA, J.P. Morgan Fleming Asset Management and Progress Investment Management Co. The U.S. stock fund and a social purpose version of the portfolio will be managed by BGI and J.P. Morgan Fleming. The non-U.S. stock fund and its social purpose version will be managed by Schroder Investment Management North America Inc. The social purpose stock index fund will be managed by BGI, which also will manage the S&P 500 index and the small-cap and midcap stock index funds. Cohen & Steers Capital Management will manage the real estate securities fund. BlackRock Inc. and ELCA staffers will manage the bond fund and its social purpose version. Pacholder Associates will manage the high-yield bond fund.
There also are six balanced portfolios, with three levels of risk. Staff manage the asset allocations and use the managers of the other options, as well as additional managers, including Alliance Capital Management LP, AXA Rosenberg Investment Management LLC, Adams Street Partners LLC, Wilshire Associates Inc., Progress Investment, Pacholder Associates and Wellington Management Co. LLP.
The Board of Pensions decided to outsource record keeping to Mellon HR Solutions, Fort Lee, N.J., in order to offer a better product at lower cost and to offer daily valuation, said Mr. Adams. "Using an outside record keeper lets us be less focused on transactions and administration and more focused on relationships," he said.
Participants will get Internet access to accounts in February and account statements that track both employer and employee contributions.