by Elizabeth Fink
August 5, 2022
Right after my election as president of the Wesleyan Covenant Association, the Holy Spirit very clearly began prompting me to pray a four-word prayer: Lord, make a way! It was one of those moments when the presence of the Holy Spirit was clear and palpable. Since that time, I have found myself praying those four words every day, throughout the day.
As the Council of Bishops has moved to shut down exit ramps for churches, I’ve prayed: Lord, make a way! As annual conferences have defeated various resolutions presented by traditionalists, I’ve prayed: Lord, make a way! As I’ve spent time with our African sisters and brothers who stand so strongly for the faith entrusted to us, sometimes in the face of extreme opposition, I’ve prayed: Lord, make a way. As I’ve spent time with our partners in the Gospel in Eastern Europe and seen how the Holy Spirit is at work there, I’ve prayed: Lord, make a way.
Last week, Keith Boyette, Transitional Connectional Officer of the Global Methodist Church, had a conversation with a representative from Wespath that conveyed good news. I believe this good news to be just one direction that the Lord is indeed making a way.
As part of its calculation for market-based pension liabilities, Wespath has adjusted how it calculates the liabilities. To quote Wespath on page four of its FAQ document for General Conference 2020: Wespath obtains a market interest rate from the FTSE (Financial Times Stock Exchange) Pension Discount Curve, which is an interest rate published monthly by FTSE Russell specifically for the valuation of pension liabilities. This rate is similar to what a commercial annuity provider would use. Liabilities calculated using that rate are then increased by 10%, (emphasis added) which is similar to how a commercial annuity provider would value pension liabilities that are to be outsourced to such a commercial annuity provider.
Effective July 1, 2022, Wespath lowered the liability premium from 10% to 5%. This change results in a reduction of each annual conference’s market-basis unfunded pension liabilities.
The news gets even better. As the Federal Reserve has been raising interest rates, those rates have correspondingly worked to lower the market-based unfunded pension liabilities. Yes, stock markets have declined recently, and that has indeed reduced assets, but the rise in interest rates has outpaced the reduction in assets. From December 1, 2021, to June 1, 2022, the aggregate market-based underfunding of all United Methodist pension plans administered by Wespath declined from approximately $2.6 billion to approximately $1.6 billion solely because of rising interest rates causing liability to diminish more than offsetting decline in asset values. Moreover, as of July 1, the change in the liability premium from 10% to 5% resulted in a further reduction to the amount underfunded to approximately $1.35 billion.
This means the market-based pension liabilities have reduced by approximately 50%.
No one likes an inflationary economy, rising interest rates, and declining markets, but I firmly believe that God is redeeming all of that and is making a way! Believe it or not, there is even more good news, on July 27, the Federal Reserve raised interest rates another .75%. That increase will reduce the market-based liabilities even more.
What does this mean for your church as it is trying to disaffiliate or is involved in a lawsuit? Wespath communicates with annual conferences on September 1 of every year with their annual “Allocated Underfunding Letter.” That said, Wespath updates the market-based liability figure every month. Some annual conferences request that updated figure every month, others on a quarterly basis. To be sure, however, annual conferences can request the figure at any time.
If your church is disaffiliating or involved in a legal settlement, you will want to make sure that your annual conference is using the most recent and updated market-basis unfunded pension liability figure. You should insist that your conference leadership request a new letter from Wespath and demonstrate to you they are using the latest numbers to ensure you are paying as little as possible. If your conference hasn’t updated its figures since September 1, 2021, you likely can reduce your potential payment towards pension liabilities 50%.
In Isaiah 43:19, God spoke to Israel as they were in exile. When it seemed like all was lost, God shared these words of hope, “See, I am doing a new thing! Now it springs up; do you not perceive it? I am making a way in the wilderness and streams in the wasteland.”
This is good news for churches. In the next couple of weeks, the WCA will have new opportunities for funding disaffiliation payments to share as well. Stay tuned!
Thank you, Lord, for making a way!
East Ohio WCA is not affiliated with the East Ohio UNITED METHODIST CHURCH.
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