Changes are happening at the Pension Boards, the biggest since 1977. But members must act by April 30 to take advantage of a key change.
Beginning July 1, there will be two new investment options added to the Annuity Fund (the Stable Value Fund and the Bond Fund). Two existing funds will change their names (Variable Benefit Fund to Equity Fund and Balance Benefit Fund to Balanced Fund). And members will have more control over their investment accounts, being able to change allocation of pension dues and to move funds quarterly among the different funds in 5 percent increments with a 30-day notice.
"However," points out Pension Boards Executive Vice President Joan Brannick, "all these changes only apply to those who are not retired. Ministers close to retirement may want to delay their retirement to take advantage of this opportunity."
Act by April 30
The forthcoming changes have many new components for members to consider. Effective July 1, investors can freely float amounts in 5 percent increments in and out of all funds on a quarterly basis with 30-day notice, except for the Fixed Fund. Members of the Fixed Fund have an opportunity to move part or all of their balance to any other fund, including the funds that will become available on July 1, but they must make that change on or before April 30. After April 30 you will not be able to move any money out of the Fixed Fund.
The Fixed Fund provides safety and security in many ways: after all, it is the fund with the lowest risk attached to it. Consequently, in the long term, the returns are also the lowest.
The Stable Value Fund provides liquidity and stability of principal. The balance of this fund should remain the same, with the interest accruing according to changes in the interest rate. However, over the long term, the earnings will be less than the Bond Fund.
The Bond Fund is designed to provide maximum return consistent with investment in long-term high-quality bonds. The balance of the fund will fluctuate with the changes in the interest rate, but earnings over time will be higher than the Stable Fund.
The Balanced Fund invests in both stocks and bonds, while the Equity Fund invests only in equities, or stocks.
The risks associated with the funds run from the Fixed Fund, with the lowest risk, to the Equity Fund, with the highest risk. These risk/return choices allow members to get the most out of their money and find a program that best suits their financial goals and matches their tolerance for risk.
Reread the December 2001 issue of "Pension Pointers." Review the Education Package mailed to Annuity Fund members in January. If you want to make changes, respond by April 30 to the personalized letter you received in January, reminding you of your current investment elections and balances. Participate in member meetings and Internet forums, where you can talk with a representative of the Pension Boards.