Lowell Almen on Lutheran Pensions

By Bishop Mike Rinehart

Last month I got Lowell Almen's 2010 book, "More to the Story: The Legacy and Promise of Lutheran Pension and Benefit Plans."

I know. The title didn't tingle my spine either. However, I felt as bishop this was something I should mark, read and inwardly digest. After all, Almen is one of the wise and sainted leaders this church has had over many years, and I get a lot of questions about our pension and health programs. Time to learn something.

Truth is, I was surprised at how interested I was for most of the book. I found myself (yes, I'll say it) hungry to get to the next page. This I had not expected. Had I made the final transition into terminal ecclesiastical bureaucracy, or had I grown to appreciate the importance of the complex structures our ancestors put in place? You be the judge. The jury's still out.

Almen begins on a personal note. One of his ancestors, Lars Gustav Almén, born in Dalsland, Sweden in 1846, emigrated at the age of 24, and after working a while ended up at Augustana College and Seminary, which moved from Paxton to Rock Island, Illinois in the mid-1870's.

Pastor Almén and his wife had 10 children. He served the church faithfully until his death in 1912 at the age of 66. His widow and three dependent children were without financial support, so his son Carl left the seminary and worked to support the family. A decade later he would complete his studies and become ordained at the age of 35.

These kinds of realities are the reason that 225 years ago, programs were created for the "superannuation of ministers, their widows and orphans." They were originally designed for the destitute. Working pastors were expected to work their entire lives, and die in the pulpit, sometimes literally.

Centuries later, after various Lutheran groups of geographical and national origin came together to form the ELCA. Ten thousand congregations and 50,000 people are served through the ELCA Pension and Other Benefits program through pension, health care, disability and survivor benefits.

Almen proceeds to lay out (in meticulous detail) the development and progression of the various programs. Apparently there was some resistance: concern over "storing up treasures on earth." Did a pension program show a lack of faith in God and the charity of congregations, or was it good stewardship? And how about life insurance? Greed, or compassion for the widow? Despite ever-present disagreements, Lutherans forged ahead with modest pensions and fraternal benefit programs. We take them for granted. At the time, they were revolutionary. "This is what it means to be the body of Christ."

These programs were very conservative, especially after the devastation of the Great Depression. Gradually the programs got more aggressive, especially during the postwar boom. At the formation of the ELCA in 1987, several objectives were agreed upon:

1. All pastors and lay workers should be sponsored, to create equal treatment for pastors, rostered leaders and lay employees.

2. The program should provide financial support in the event of illness, injury, disability, retirement or death.

3. Pension, health, disability and survivor benefits should be bundled, to ensure consistency of coverage and avoid gaps.

4. It would be an employer-paid model, given the comparatively low salaries of church workers.

5. Health costs would be shared. Employers of greater means paid more so that employers of lesser means could participate fully. This kept health care affordable for small congregations of limited means.

It was also decided that this would be a defined compensation plan, not defined benefit. The plan defines the contributions, not the resulting benefits. This created a manageable program, but it also meant actual levels of income in retirement could not be predicted. The idea was this: to reach a pre-retirement level of income in retirement, one would have to work 35 years and also draw Social Security benefits. The individual account system qualified as a tax-sheltered annuity under IRS 403(b)(9). The contribution for retirement would be 10% of defined compensation (for pastors, base + housing + SS allowance).

Retirement income would then be variable, based on contributions related to compensation over a career, length of service, the types of BOP funds into which a member chooses to invest (bonds, equity, balanced, etc.) and the actual performance of those funds. In the mid-90's the hot debate over divestment made social-purpose funds popular and led to the "South Africa Free" Funds. By 2003 there would be 20 funds.

Returns in 1989 on equity funds were 26-29%. Bonds were 10-14%. Balanced around 17%. By 1995 domestic stocks posted the highest return since 1958. By the end of the 90's the 10-year rate of return for the stock fund was 16.8% and 15.6% for the Social Purpose Stock Fund.

Of course this all imploded with the 2001 downturn. 9/11 happened and the dot com bubble popped.

In the predecessor church bodies, annuitization was required. In 2000, this requirement was eliminated. Members could withdraw. Many chose to participate in a pooled annuity fund that would guarantee members a paycheck for the rest of their lives. Members could trade the ownership of their accumulations for a lifetime stream of income, no matter how long they lived. The annuity was variable, and therefore subject to market conditions. This worked well until the drastic declines of 2008, when the credit bubble burst.

During this same two decades, health care costs also skyrocketed. 1987-1991, Almen reminds us that health care costs rose 18-20%. As health coverage grew, it cut into workers' salaries.

Also, challenging trends emerged. In 2000, the U.S. population had an average age of 39 but the average age of plan participants was 10 years older: 49. Health care costs tend to be higher for older members. The average age of ordination had risen from 29 to 41. To top all this off, everyone was living longer. Rates remained on a percentage of salary, however, to avoid age-related pricing.

Managed care kept medical bills more reasonable, and a prescription drug program was added. Co-pays were raised for brand name drugs and lowered for generic.

A study showed that in 2005, 43% of all medical and pharmacy claims resulted from potentially avoidable conditions. Cost: $41 million. Cardiovascular disease could be controlled. Cancer, if caught earlier, could be treated. There were specific identifiable behaviors that would reduce costs dramatically, and provide members with greater quality of life. Thus "Wellness" initiatives were born.

Reviewing ELCA claims data, Dr. Gwen Wagstrom Halaas discovered four problems plaguing church workers:

1. Stress and stress-related illnesses

2. Excess weight and lack of physical activity

3. Lack of proper nutrition and elevated cholesterol, and

4. High blood pressure and heart disease

A voluntary health assessment was added. Members could earn wellness dollars for taking the assessment and for completing health improvement activities. Moving from a traditional disease model for the program to a wellness model has saved money and enhanced lives. Furthermore, money saved on hospital bills lowers health care premiums, giving congregations more money to use for ministry.

In 1990 the average clergy salary in the ELCA was $31,000. Pastors in small rural or urban congregations are often grossly undercompensated. Many older pastors spent their entire ministries in such settings. Of the 10,500 retirees in 1993, 1300 were receiving the minimum pension ($350/month for pastors and $233/month for surviving spouses). Some in predecessor church bodies were receiving less than $300/month. Something had to be done. The 1993 Churchwide Assembly voted to create a Special Needs Retirement Fund. Donations were received. In 1999 the ELCA Church Council put half a million dollars into the fund. Now the fund is over $6 million. Hearkening back to the days of "superannuation of ministers, widows and orphans," this fund supports mostly widows whose husbands served when pastors were paid very little.

Through the years controversial issues have emerged. In 1995 the BOP Board of Trustees proposed an amendment to limit induced abortions to three conditions: 1. Where the mother's life was threatened, 2. Where the pregnancy resulted from rape or incest, or 3. Where the embryo or fetus had lethal abnormalities incompatible with life. Bishop Chilstrom appointed a nine-member group to review the policy. The work group emphasized that abortion should be an option only of last resort, because of the basic moral presumption to preserve life. The ELCA's Church Council affirmed the findings. The Council of Bishops endorsed the work group's findings, and emphasized that there was absolutely no support for abortion on demand. In 1997 an amendment was added excluding late term abortions except where the life of the mother was threatened or the fetus had lethal abnormalities.

Interpreting these decisions was incredibly difficult. Letters and emails were received. Lutherans do not have canon law. Moral decisions rest with the individual, guided by God's Spirit, instructed by Scripture, and informed by pastoral discussion.

In recent years the BOP has changed dramatically. A stronger focus on customer service and managed care has provided Lutheran church workers with outstanding health coverage. The addition of the web page, with flexible options has made a big difference in recent years.

The pension plan has come a long way in 150 years, from the days of superannuation of widows and orphans, but it is still focused on providing just coverage for church workers and their families, as well as making it possible for pastors and other church workers of small congregations to get the same top notch care those in larger, wealthier churches receive. I, for one, am deeply grateful for what our ancestors set in motion for us. Let us be good stewards of what we have.

Michael Rinehart, bishop

Register Now for the 2011 Tri-Synodical Conference

It will be here before you know it, so register now!  Marcus Borg will be with us for a thought-provoking gathering centered around "Then and Now - What the 1^st Century Church Can Teach the 21^st Century Church".  Borg's presentations will include: "Speaking of God and God's Passion in the 21st Century," "Speaking of Jesus and Jesus' Passion in the 21st Century," and "Speaking of Discipleship in the 21st Century."  There will be ample time for discussion following each presentation.

Our time together will also be filled with inspiring worship that will blend ancient and modern worship elements, collegial fellowship, learning modules, relaxation, and the island hospitality that Galveston always provides.  The Planning Committee hopes that you enjoy the conference and that it is a blessing to your ministry.

Our discounted hotel rate of $115 is only valid through January 3, so be sure to book now!  Visit our Tri-Synodical Conference page for details on the discount code that you can use to book online, and a link to go directly to the booking page, or call the hotel's reservation line at 888-388-8484 and give them the name of our event, Tri-Synodical Theological Conference.

Keys to a Vital Congregation

By Pastor Kerry Nelson

Our newest ecumenical partners, the United Methodist Church, recently received the results of a massive study of 32,000 congregations seeking the answer to a question we all share:  What is the key to a healthy congregation?

Working with an outside consultant, researchers developed a "vitality index" to measure every congregation studied. 

They discovered that congregational vitality - measured by aspects of congregational life ranging from worship attendance, adult baptisms, and meaningful ministry in the community - was not a matter of congregational size, style or geographic location, but rather the combination of four common factors.

1.    Small groups including adult groups and youth/family programs

2.    A worship life that includes both contemporary and traditional styles with an emphasis on excellent, relevant, sermons

3.    Pastors who are very good at least one thing (which could vary) but who work hard on mentoring and cultivating spiritual growth in the laity

4.    An emphasis on effective lay leadership

The study did include some surprising results.  Among them, it didn't seem to matter whether the ministers had seminary degrees or not; whether pastoral ministry was a first or second career; or how long the minister had been engaged in pastoral ministry.  Also, while vital congregations all had at least some type of service outreach program in place, the number and types (global or local) did not have a significant impact on congregational vitality.

What does this mean for us?

While Lutheran congregations were not the subject of the research, it only makes sense that we would see much the same dynamics among our congregations. It also underscores the validity of the leadership that we have been receiving from Bishop Rinehart.

Developing a healthy system of relational small groups, including continued development of youth and family ministries, is a fantastic source of spiritual growth for people. As people grow, so do the congregations of which they are a part.

We are officially now past the "worship wars" of the 1990's. The results are now in. BOTH traditional and alternative/contemporary worship styles and adaptations can be effective in connecting with new people and flourishing congregational vitality. The key is doing whatever we do well with the needs of those who are not yet here foremost in our minds.

Preaching matters.  Preaching that is relevant to the daily lives of God's people feeds them and prepares them to serve well in the coming week.  All of us set aside to bring God's Word to God's people on a weekly basis need to be engaged in ongoing learning to improve our preaching.

We are reminded that Christianity is a team sport.  It is all about relationships that matter.  We need to constantly be working to equip new leaders, to encourage people in their ministries, and to give our ministries away.  Pastors need to invest more time teaching Bible study teachers than in teaching Bible studies, mentoring leaders rather than doing things for them, and growing the capacity of God's people to serve inside and outside of the church.

And our lay leaders need realize again that in their baptisms they have been equipped for the work of ministry in their own particular sphere of influence at home, work, community and church.  Our congregations will literally grow as far and as quickly as our lay leaders are willing to themselves grow in their Christian discipleship.

Far too often we get discouraged when we keep hearing bad news about the work of the Christian church and the struggles among so many of our congregations.  The results of this study ought to help us take heart. 

We CAN turn congregational life around and we can do so by specifically focusing on these four achievable foci.  Not only that, but when we try we will discover ourselves focusing on precisely what God had in mind for the church.  And we might even have fun with it.