The Church Pension Group has released a report on its strategy and health to the House of Deputies Committee on the State of the Church.
The report responds to a series of questions submitted by the Church Pension Group Subcommittee and addresses CPG’s relationship to the church, CPG’s pension and health benefits programs, its financial sustainability, and its investment strategy. The subcommittee was convened by the Committee on the State of the Church to study CPG’s preparedness for the future.
Highlights from the report include:
- CPG’s investment portfolio consists of 30 percent bonds and fixed-income assets; 40 percent alternative investments like private equity, hedge funds, and private real estate; and 30 percent publicly traded equities.
- Most funds are run by outside managers, with more than 200 of them managing almost 500 different funds. Compensation for managers typically ranges from 12 basis points to 2 percent for “more involved private equity and other private investments.”
- CPG sees itself as having “less flexibility than most Church-related organizations to adapt a divestment approach” related to environmental and social concerns.
- The 18 percent assessment paid by clergy is “not adequate fully to support the benefits CPF provides to clergy,” with around $90 million collected annually and $350 million going out in benefits. Return on investments fills the gap.
- CPG lost around $3 billion in assets during the 2008 financial crisis but did not need to reduce benefits paid to participants. That loss has since been recovered. CPG says it remains “focused on the fact that we need to be prepared for future financial crises from which recovery realistically can be far more muted and protracted,” and the organization has increased the sophistication of its financial modeling.
- CPG maintains that a defined benefit plan provides higher benefits than a defined contribution plan would, especially for clergy with shorter careers.
- Ordained women, on average, make less than men, with a pay gap of $11,200. Women make up 37 percent of full-time clergy but only 22.5 percent of senior positions. Women in senior positions tend to make less than senior men, with a 10 percent pay gap among those with 20 to 29 years of service.
- This gap extends to retirement benefits among clergy who served longer. Retired men between 65 and 75 with more than 30 years of credited service receive around $55,200 in annual benefit, while retired women receive $49,200.
- 79 percent of clergy and lay employees are enrolled in platinum and gold medical plans, with 20 percent enrolled in silver plans and 1 percent in bronze.
- CPG believes that making participation in the Denominational Health Plan optional would produce results mirroring experience in Affordable Care Act programs. “Younger and healthier participants would be the most likely to opt out, leaving a higher population of older, less healthy participants in the plan.”