Request for Calculation of Unfunded Pension Liability

Formula and Procedure for the Calculation of Each Local Church’s Pro Rata Share of Aggregate Unfunded Pension Obligations to the Iowa Annual Conference (¶2553.4d)

Form to Request Calculation of Estimated Local Church Obligations

For the purposes of disaffiliation as outlined in ¶2553.4d of the Book of Discipline, the Iowa Board of Pension has developed a formula to divide the unfunded pension liability using the same criteria in in which the liability was created – clergy plan compensation.  The Iowa Board of Pension will use the following process to determine a congregation’s pro rata share of the aggregate unfunded pension liability:

  1. Twice each calendar year, the Iowa Board of Pension will request and obtain the Iowa Conference’s total unfunded pension liability (UPL) from Wespath using market value funding data as of April 1st  and again with the annual actuarial valuation provided by September 1st to the Conference Board of Pension.
  1. When a church enters into the disaffiliation process, the pro rata portion of the unfunded pension liability will be calculated using clergy plan compensation (salary and housing) and clergy eligibility for the plans as follows:
  1. Five data points over a 25-year period will be used to represent the accrued pension liability for the church.  The five data points will begin with the year prior to the Conference’s consideration of approval for disaffiliation.

Example:  A church wishing to disaffiliate in 2023 will result in the Board of Pension collecting the plan compensation data from the Iowa Annual Conference Journal for the years 2022, 2016, 2010, 2004, and 1998.

  1. Using the Iowa Conference Statistical Tables, the clergy plan compensation data will be gathered for these five data points. The church will be assigned a percentage of the total Iowa Conference plan compensation during those data point years the appointed clergy person was eligible and participating in the pension program.

                                               2022 Iowa Journal

2021 Local Church Plan Compensation = 2021 % of Conference Total

2021 Conference Plan Compensation 

2016 Iowa Journal

2015 Local Church Plan Compensation = 2015 % of Conference Total

2015 Conference Plan Compensation

2010 Iowa Journal          

2009 Local Church Plan Compensation = 2009 % of Conference Total

2009 Conference Plan Compensation

2004 Iowa Journal

2003 Local Church Plan Compensation = 2003 % of Conference Total

2003 Conference Plan Compensation

1998 Iowa Journal

1997 Local Church Plan Compensation = 1997 % of Conference Total

                1997 Conference Plan Compensation

  1. Conference Plan Compensation (salary plus housing) will be calculated for each data point year using the plan compensation for all pastors appointed to the local church in that year plus housing as a parsonage credit.
  1. For the Local Church Plan Compensation, the housing is calculated as 25% of approved annual salary when the clergy lives in a parsonage provided by the church or as the actual cash housing allowance paid to the clergy. Clergy eligibility and participation in the plan will be a factor in determining accrued pension liability.
  1. If churches have merged, the highest plan compensation figure will be used in those years before the churches merged.  Churches in a multi-point charge will have their portion of the unfunded pension liability calculated separately.
  1. The five data point percentages will be averaged to represent the local church’s average portion of the overall plan compensation in the Iowa Conference. (AVG%)

Example: (2021% + 2015% + 2009% + 2003% + 1997%)/5 = AVG%

  1. The local church’s pro rata share of the unfunded pension liability UPL will be calculated as follows:

Conference UPL x Church average percentage of plan compensation

UPL x AVG% = $ Church’s share of unfunded pension liability

  1. Estimates of a church’s unfunded pension liability obligation may be provided with the consent and action of the local church administrative council or board.
  1. The final unfunded pension liability obligation will be calculated using the most recent Conference unfunded pension liability number and provided to the church per the Conference Board of Trustees’ guidelines.

  1. Churches with a disaffiliation effective date of June 30, 2023, will receive their final unfunded pension liability number by February 15, 2023, using the Conference UPL dated September 1, 2022. Churches with a disaffiliation effective date of December 31, 2023, will receive their final unfunded pension liability number by August 15, 2023, using the Conference UPL dated April 1, 2023.
  1. Should a local church believe their calculation has been made in error, they may contact the Conference Treasurer no later than 10 days following the receipt of their final calculated unfunded pension liability amount as communicated by the Conference Board of Trustees
  1. Any changes in assigned liability amounts must be approved by the Iowa Conference Board of Pension and Board of Trustees.

 ​Example of the Unfunded Pension Liability Calculation