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BY ERIK ALSGAARD
UMCONNECTION STAFF

Get ready for a new retirement plan if you?re a clergy person or participant with the denomination?s General Board of Pension and Health Benefits.

Called CRSP, or the Clergy Retirement Security Program, the plan starts Jan. 1, 2007, and replaces the current Ministerial Pension Plan, or MPP.

Making sense of all this alphabet-soup is the Rev. Wayne DeHart, the Baltimore-Washington Conference Benefits Officer.

'CRSP is a retirement program designed to provide lifetime income and account flexibility,' said DeHart. He and his team have recently finished a series of five workshops explaining the pension changes offered throughout the conference. More than 200 people attended the five gatherings.

DeHart said that CRSP really is two retirement plans rolled into one. The first is a 'defined benefit' plan that will provide retirement income for the participant and the participant?s spouse as long as they live. The second is a 'defined contribution' plan, providing an account balance that participants can access when needed.

'Clergy members are eligible to join CRSP, or, if you?re a local pastor, you?re eligible as long as you?re under episcopal appointment to a conference, church, charge, district or conference-controlled entity or unit,' DeHart said.

For some participants, this will be the third pension plan that they will be in. For many, this will be their second. Ability to contribute to the old Ministerial Pension Plan (MPP) will cease on Jan. 1, 2007, according to the General Board of Pension and Health Benefits? Web site, www.gbophb.org.

Participants will remain the vested owner of their MPP account balance and the same MPP distribution rules will apply that were in effect before the introduction of CRSP.

'Retirement for some participants will become a four-legged stool,' said DeHart, noting the CRSP plan, the other General Board plans, social security and personal savings such as the United Methodist Personal Investment Plan, or UMPIP. 'How much each person in the plan will need to rely on their own personal savings depends on the values of the other sources.'

Here?s how CRSP works. The defined benefit portion will provide a monthly retirement income for life. It?s called a 'defined benefit' plan because the amount of a participant?s benefit is defined in advance by a formula that includes the Denominational Average Compensation (DAC) and the years of credited service (see sidebar). As the years of service grow, so will the amount of the monthly benefit.

'You can?t outlive or outrun the monthly DB benefit,' said DeHart. 'It?s not tied to how well you save, or if you save, or if you invest or grow your savings.'

The defined contribution portion is the other piece of CRSP. Here, the salary-paying unit contributes 3 percent of a participant?s compensation to CRSP. Though CRSP does not accept participant contributions, participants can grow their account balance through personal contributions to UMPIP and by choosing from a variety of investment funds, DeHart said. Account contributions and investment earnings grow tax-deferred until they are withdrawn.

SIDEBAR:
A hypothetical example

The General Board of Pension and Health Benefits offers this hypothetical situation to explain the new defined benefit portion of CRSP.

Let?s say that you are a clergy person who retires in 2015, after 25 years of service. You would have 8.5 years of full-time credited service under CRSP - Jan. 1, 2007, through July 1, 2015. Further, let?s say the 2015 Denominational Average Compensation is $60,000 (in 2006, the DAC is $52,382).

Here?s how it works. Take 1.25 percent (0.0125) and multiply it by the Denominational Average Compensation, or DAC, (60,000). Multiply that number by years of credited service (in this case, 8.5), and you would arrive at $6,375 per year. Divide this figure by 12 to arrive at the monthly benefit, or $531.25 per month.