At first glance, Resolution A060 looks like the kind of resolution that wouldn’t excite much interest among even the most committed church geeks. What possible excitement could ensue from a proposal to have a task force study the church’s pension system?
Plenty, as it turns out.
The resolution is the result of three years of work by the House of Deputies State of the Church Committee, which House of Deputies President Gay Clark Jennings asked in 2015 to focus on studying “social justice and advocacy ministries in the Episcopal Church, multicultural and ethnic ministries, and the needs and work of the Church Pension Group and its services as they relate to the changing church.”
“In that process, many questions have been raised,” the committee said in its Blue Book report. “Do the investments and business methods of the Church Pension Group [CPG] reflect the values of the Church? Did the establishment of a mandatory lay pension system achieve parity between lay and ordained church workers? Does the Denominational Health Plan [DHP] serve a useful purpose since the Affordable Care Act has been enacted?”
To answer those questions and others, the committee proposed Resolution A060, which calls for the creation of a twelve-member task force that would report to the 80th General Convention. The resolution has been referred to the legislative committee on governance and structure.
Deputy Brendan O’Sullivan-Hale of Indianapolis, who served on the State of the Church Committee, helped craft the resolution. Part of the reason to have a task force, he said, is disagreement about the relationship between General Convention and CPG, and especially about convention’s authority to direct CPG to address issues like the parity of lay and clergy pensions and practices for socially responsible investing.
The 1913 General Convention voted to establish the Church Pension Fund to administer the Episcopal Church’s clergy pension system in accordance with the principles it set forth. Those principles, said O’Sullivan-Hale, seek to ensure that the fund has adequate funding to meet its obligations to pensioners, but are silent on the subject of how the investment of pension funds should be influenced by the values of the church.
CPG’s authorization to handle the church’s pension system is set forth in Canon I.8 of the Constitution and Canons of the Episcopal Church. “The canons do have a right to change,” said O’Sullivan-Hale, noting that Canon 1.8.9 provides General Convention the opportunity to amend the canons governing CPG, but also ensures that CPG will be given “ample opportunity to respond” to any proposed changes.
Although O’Sullivan-Hale characterizes the Task Force on the State of the Church’s conversations with CPG as a “productive and open dialogue,” he said that the company does not accept the principle that General Convention can direct its work. “The consistent opinion that we’ve received from CPG is that the mechanism by which General Convention directs CPG is the election of its trustees, and that that is the appropriate way, not by piecemeal resolutions,” he said. “There are many people at General Convention who believe that not to be the only means.”
CPG sees itself as “a company with one customer,” he said, “so we [General Convention] don’t really get to tell them how to do their business. But the relationship seems a bit more ambiguous than that. This isn’t a company we went out and hired, we created it. Is it the case that the board of trustees is the only entity has the authority to direct CPG?”
The House of Deputies elects 24 of CPG’s 25 trustees for six-year terms and the House of Bishops confirms the elections. At the 79th General Convention, twelve trustees will be elected from among twenty-seven people nominated by the Joint Standing Committee on Nominations and any nominees from the floor. Six nominees are incumbents seeking a second and final term.
Deputy Jane Cisluycis of Northern Michigan, the secretary of the legislative committee on the Church Pension Fund, is a layperson who has served as her diocese’s operations coordinator for 22 years. “I have a visceral response to the lack of parity between what CPG provides for lay employees as opposed to clergy,” she said. When she participates in CPG webinars and reads materials put out by the organization, she said, she perceives that the company has a lack of interest in being proactive about addressing the disparities between the clergy and lay pension plans and other CPG programs.
“Unless they’re pushed by General Convention, things aren’t going to happen,” she said. “When people ask, ‘What about lay CREDO [a CPG-funded wellness program for clergy], what about short-term disability for lay people,’ there’s an institutional shrug,” she said.
Deputy Thomas Brown of Massachusetts has been a trustee of the Church Pension Fund since 2009 and will serve as its board chair for a three-year term beginning at the close of General Convention. He opposes A060.
“The State of the Church [Committee] engaged CPG,” he said. “I think we did that in the last three years, so I wonder if there’s something we didn’t study or something that isn’t being named. I think the work has been done.”
Instead of creating a task force to study the pension system, he said, General Convention should ask CPG to provide “some data about how to change the way we respond. I think it’s up to General Convention to ask the experts—and CPG are the experts. Ask us what you want to know and we will deliver the goods,” he said. “It’s bad stewardship to spend $50,000 [the budget request in A060] to create a new structure when there’s already one in place.
“The relationship [between General Convention and CPG] is really strong,” he said. “Any time General Convention has asked CPG to do anything in the last hundred years, CPG has responded.”
Although he opposes the creation of the task force proposed in A060, he said that as board chair, he hopes to “steer that conversation in a way that in no way takes away from my predecessors but does engage this conversation in a fresh and new way.”
He pointed to CPG’s new interest in positive impact investing as one place to start. “My experience in Salt Lake City [site of the 78th General Convention] is that there were deputies and bishops who pressed CPG to take seriously the needs of the world,” he said. “I think what they meant by that is that they wanted CPG to make positive impact investments in companies that weren’t doing good and use the impact that we have together to change the world. So, in the last three years, over a billion dollars has been invested.”“There’s a desire on the part of trustees to be making money while making the world better,” he said.
O’Sullivan-Hale, who was an investment consultant for 16 years before joining the Diocese of Indianapolis as canon for administration and evangelism in 2017, agreed that the social impact of investments is a key focus of the discussion about General Convention’s authority over CPG.
At this General Convention, he chairs the deputy legislative committee on stewardship and socially responsible investing. Resolution A060 goes hand-in-hand, he says, with Resolution A061, also proposed by the State of the Church Committee. That resolution asks the presiding officers to appoint a task force “to summarize the ways in which The Episcopal Church values money and other resources of financial value” and “to study the investments and other assets of the Episcopal Church, including but not limited to the holdings of the Church Pension Fund, to discern ways in which those investments and assets reflect the Church’s theology of money.”
“There’s no real way to keep your hands clean as an investor in a capitalist system,” he said. “But we have to think about the non-negotiables on the top of our list that we either have to avoid or invest in to do shareholder engagement.” He cited the for-profit prison industry as an example. “I just don’t see an ethical way to invest in that.”
Having a theology of money adopted by General Convention, he said, would make it more possible for CPG to invest in keeping with the values of the church. Resolutions directing divestment or investor engagement, he said, can be difficult for professional investors to execute because many mutual funds are based on the Standard and Poor’s index of the top 500 companies in the country, which includes fossil fuel companies, companies that profit from Israel’s occupation of the Palestinian territories, tobacco companies and other sectors that people of faith might object to.
“So when we say divest, do we mean divest just of individual holdings, or do we mean index funds and other mutual funds that include those companies in their holdings?” he said.
As for pension equity, Brown said that it’s up to General Convention.
“This is a question for the church—the way in which compensation happens is a struggle for the church. Are clergy willing to lead the way to structure compensation in a more equitable way? CPG is ready to pay pensions in whatever way the church directs,” he said. “I think the way to solve this is to increase the amount of assessment for lay people or decrease for clergy.”
Currently participating church employers pay nine percent of a participating lay employee’s salary and eighteen percent of a clergyperson’s salary into the pension fund’s defined benefit plans. Lay employees can choose instead to participate in 401(k) or 403 (b) plans, into which employers pay five percent of the salary and must match at least four percent of the employee’s contributions.
Resolution D045 would mandate that employer contributions to both lay plans increase by one percent each year beginning in 2020 until they reach eighteen percent.
Brown pointed to the new clergy pension plan launched at the beginning of 2018 as evidence of CPG’s willingness to respond to the church’s changing needs. When the 2015 General Convention expressed concern about pension options for part-time, interim, and bi-vocational clergy, “We responded with listening sessions around the country. Some provinces are more impacted than others,” he said. “As a result, we made big revisions to the CPG clergy pension plan, all of that driven by the need to respond to a changing church. It’s flexible for everybody, nimble and equitable, and we erred on side of raising up those who were making the least.”
For Cisluycis, CPG’s focus on clergy pensions “feels like getting shut down,” she said. “It’s not just me. There are lots of hard working people who are not going to have any kind of cushy retirement. The [clergy] folks who get it are going to be really fortunate.”
“It’s so cultural—when people are comfortable, it’s real easy to forget about other people. You have to have some skin in the game to notice things.”
According to the CPG 2018 annual report, released on Tuesday, the total assets of the lay pension plan are $207 million. Under standard accounting principles, said Daniel Kasle, CPG’s chief financial officer, the plan is funded at 85 percent of the level needed to meet its future obligations to pay pensions. But that number doesn’t signal trouble ahead, he said. “We are confident that the plan has sufficient assets to continue to pay its obligations.”
Brown says that even though CPG’s assets include over nine billion dollars in net assets available for clergy pensions and just $207 million dollars for lay pensions, the company is powerless to address the disparity without General Convention action to increase employer contributions.
“We’re very clear that we can’t do that, which is sometimes for me an emotional tension,” he said. “There is this moral framework, in the face of all this wealth, why are we not responding? But legally, we can’t. This money has been given for a particular purpose, and our foundation is to stand on the promise we made legally.”
“The fiduciary responsibility should be able to be balanced with what I can only think to call charity, Jubilee, Gospel stuff,” Cisluycis said.
“I’m going to bring my skills of perception and good sense of humor,” to the committee’s work, she said. “There’s a lot to learn still.”
The article Convention Seeks Clarity On Relationship with Church Pension Fund appeared first on House of Deputies News.
This post appeared here first: Convention Seeks Clarity On Relationship with Church Pension Fund
[House of Deputies News]