Seminarians pose pension problems

LOUISVILLE, Ky - Reporting to the General Assembly Council’s annual budget consultation in Louisville on December 12, 1997,

a Board of Pensions representative shared good news and bad news.

By Parker T. Williamson

The good news is the fact that the Board of Pensions had realized a 19 percent annual return on its investments at the end of October and that its assets now exceed $5,000,000,000. The bad news is that changes in the denomination’s seminary population will pose a major challenge to the pension plan.

The Board of Pensions has just completed a survey of Presbyterian seminary students and is now analyzing its data. While there is much yet to be discovered, a trend is obvious. Today’s seminary students tend to be older (many in their late 30s and early 40s), second career persons. They are also entering seminary with little or no savings. In fact, many of them are borrowing to finance their seminary education.

The Presbyterian Church (USA) pension plan assumes that a minister will be gainfully employed and participating in the plan between 30 and 35 years. Because of their late start in the ministry, many of today’s seminary students will not meet that assumption, and the retirement income that they could expect to realize from their years of participation will probably not be adequate. That problem is exacerbated by the expectation that with no accumulated savings, and entry-level income at age 40, few of these ministers are likely to develop investments that could produce significant additional retirement income.

In the current pension plan, higher-paid ministers do not receive full benefit for the contributions that their employing congregations make on their behalf. The Board of Pensions utilizes a formula that takes away some of the retirement benefits that higher paid ministers would have received in order to fund increased annuities for lower-paid ministers and their families.

Apparently, few ministers who currently participate in the plan have voiced objection to this formula. But that may change if pressures toward equalization measures are increased by the presence of newer ministers with shorter tenure in the program.

The Board of Pensions has barely begun to address this problem. Once the data it has collected has been thoroughly analyzed, the board will gather for in-depth consultation on the services that it can provide to a changing client population.