With Dr. Bruce Hartung
This month’s column addresses a reader’s concern and a question after receiving a Nov. 16 letter from Concordia Plan Services (CPS) President James F. Sanft about the effects of the economic recession on the Concordia Retirement Plan. The reader’s inquiry begins by quoting from that letter.
Q: “But there is good news, and it is important to recognize these things as well. Although contribution rates will increase beginning in 2010, the amount of increase is modest given the magnitude of the recession. No consideration has been given to reducing benefits currently being paid to Plan beneficiaries. No consideration has been given to decreasing benefit accruals for active workers.”
This is good news. [But] something else follows that worries me. It is, “Of course, no one knows what the future holds and future economic challenges could bring some of these items into consideration.”
Could benefits be reduced in our retirement plan? I thought we were guaranteed our benefits. Please research this and give us the straight answer.
A: These are anxious times. With economic uncertainties around us, questions like this one are really to be expected and should be asked.
I did some research on our behalf (“our,” because I am in the Plan also). I will offer the straight answer, as I can best discern it.
A baseline question though: Do any of us think we will not get a “straight answer” if we call the administrators of our Concordia Plan Services and ask? I recognize that there is considerable mistrust of national organizations generally, and in my experience there is such distrust, at least at times, of even our LCMS leadership.
I propose that it is possible that there is not something nefarious hiding under every administrative rock. Trust is earned and not assumed, granted; but mistrust assumed without being earned speaks to broken relationships and an expectation of being hurt. Assumed mistrust causes a lot of difficulty.
So, expecting a “straight answer,” I approached the leadership of Concordia Plan Services because my basic premise is that they are working in our best interest.
As our readers likely know, the LCMS retirement plan is a “defined benefit” plan. The alternative is a “defined contribution” plan. In this kind of a plan (and most plans are this way now), your benefit is dependent upon things like stock market fluctuations and interest rates. Our defined benefit plan, on the other hand, commits to a benefit for its retirees and manages its assets in order to achieve the commitment it has to our workers.
The retirement plan administrators “offer our confidence that all that we are doing to manage and safeguard the assets of our Plans is appropriate.”
Does this mean that there are no conditions under which the commitment given for the particular rate of retirement benefits will change? No, at least that is how I read the situation. Future economic challenges may force revisiting that commitment. This seems natural to me.
Once I get beyond the illusion that some things in life are guaranteed and recognize that the only real guarantee is made by God in the life, death, and resurrection of Jesus Christ, then I understand that everything else can change. That includes benefits paid for our retirement plans. Even so …
The Synod’s retirement plan has years of excellent investment history, follows a disciplined approach to decision-making, and uses external consultants and investment managers. But more than all that, the administration of our Plans asserts the following: “We are forthright about difficult decisions and changes” and “we communicate with all of our workers, retirees, and our employers so that all will have a good understanding about how we are meeting our challenges.”
Bottom line: “Concordia Plan Services is confident in being able to meet its foreseeable commitments.”
These are strong statements from our CPS administration!
Diversity continues to be the key, however. As the CPS folks have said for a number of years, it is important to have various instruments to secure a financially safe retirement.
Rev. Bruce M. Hartung, Ph.D., is dean of Ministerial Formation at Concordia Seminary, St Louis. He can be reached at firstname.lastname@example.org.
Posted Feb. 3, 2010