Conference Board of Pensions, Trustees working on disaffiliation processes

September 28, 2019

When the 2019 special session of General Conference addressed differences over human sexuality, it considered how churches that choose to leave the denomination over these differences would do so and what would happen to their assets. 

General Conference approved Petition 90066 that creates a disaffiliation path under a new Discipline ¶2553 that would allow a departing local church to keep its building, if it pays certain obligations to the Conference. 

The new ¶2553 outlines some of what churches would owe to Conferences – such as apportionments (Mission Shares) – but leaves other aspects, such as what would be owed for pastors’ pension liability, up to the individual conferences to determine.

In New England, the Conference Board of Pensions and the Board of Trustees are working now to determine how the disaffiliation process would work here.

Complicating that work is the finding of voter fraud at General Conference, which resulted in the vote to substitute the minority report for Petition 90066 (which was approved by just two votes; 402-400) to be considered void. 

What that means for the validity of the disaffiliation process outlined in the new ¶2553 is not known at this point. The Judicial Council will consider this and other questions when it meets Oct. 29 to Nov. 1, 2019. (See the docket here.)

In the meantime, the chairs of Conference Board of Pensions and the Trustees – Rev. David Hoyt and Rev. Mark Monson Alley, respectively – say their boards are working on the assumption that the legislation will withstand Judicial Council review, and are using that as the basis for the discussions taking place this fall. 

Conferences have the option of adding requirements to the disaffiliation process, Rev. Alley said, and the Trustees are considering what, if any, additional steps they may propose. 

For example, some conferences are asking departing churches to pay a portion of the legal fees incurred for the disaffiliation process. Rev. Alley said the Trustees would bring any measures they consider to the 2020 Annual Conference for consideration. 

The Conference Board of Pensions, on the other hand, is required to come up with a formula for addressing the unfunded pension liability – or the amount required to ensure clergy pensions are fully paid.
A local church that sought to withdraw from The UMC would also, in effect, leave a portion of its long-term pension obligations to the Conference and its remaining churches. 

General Conference approved Petition 90016 brought by Wespath (formerly the General Board of Pensions and Health Benefits) to address how departing churches would pay their “fair share” of this obligation to the Conference. 

Under the legislation, Wespath would estimate the total unfunded liability for accrued benefits and annuities being paid for the entire conference. But the conference itself would then decide how to allocate a proportional share of that to a local church. 

The total unfunded liability provided by Wespath would be calculated using market factors similar to a commercial annuity provider

To illustrate what this means, we can look at the Conference’s current situation. At this writing, the NEAC’s pension liability is fully funded (104 percent); there is enough money to cover clergy pensions into the future. But the Conference has roughly 78 percent of what would be needed based on market factors. 

Rev. Hoyt said the board will look at a number of possible formulas for determining what a given church would owe for pension liability then make its recommendation. It is likely that recommendation would  be brought to the 2020 Annual Conference for consideration. 

The legislation adopted by the 2019 Annual Conference regarding disaffiliation (RS-19-211) is also based on the new ¶2553, but dealt with the discernment process around the decision to leave The UMC, not church assets. The bishop was asked for a decision of law (his decision is included in the 2019 Journal). Review of that decision by the Judicial Council, routine for all rulings made by bishops, is also on the October docket.