BBT Board takes steps to ensure future of Brethren Medical Plan.

Meeting in Middlebury, Ind., Nov. 19-20, 2004, the Brethren Benefit Trust (BBT) Board took several steps in an effort to ensure the longterm health of the Brethren Medical Plan (see Newsline Dec. 3, 2004, "BBT makes new requirement in effort to save Brethren Medical Plan").

The board also supported a program to help church agencies develop planned giving and approved a 2005 budget, and its Investment Committee studied the use of "soft dollars" and reviewed investment strategy for the Retirement Benefits Fund and the possibility of creating a "stable-value" fund.

The board reaffirmed its support for a new program being developed in which BBT staff members work with other church agencies to develop longterm financial support through deferred giving. The program is intended to assist church agencies that do not have planned giving staff of their own. Under the plan, agencies will continue to be the prime contact with their own donors. BBT will support the agencies with calculations, explaining gift options to donors, and through the production of applicable resources.

The BBT Investment Committee studied the use of "soft dollars" to pay for certain investment research costs. Soft dollars are generated when an investor directs that purchases and sales of securities be handled by a specific broker. The broker then rebates a portion of his or her commission on the sales to be used by the investor to purchase research. Although widespread, the practice has received considerable negative attention recently, primarily because of the potential for conflicts of interest that it creates. The Investment Committee declined to accept soft dollars on BBT accounts and will request more complete reporting from investment managers on how they use soft dollars.

The Investment Committee also reviewed its investment strategy for the Retirement Benefits Fund. Assets in the fund are the source of payments for Brethren Pension Plan retirees. With many experts predicting several years of below-average returns, the committee decided to review current allocations.

In response to requests from Brethren Pension Plan members and asset management clients, the Investment Committee also addressed the possibility of creating a "stable-value" fund. By investing in a socially responsible mix of short-term securities, such a fund would be able to generate positive returns under most market conditions. Although returns would be small, they would be unlikely to be negative in any given month. A stable-value fund would benefit those nearing retirement who could use a stable-value investment to "park" pension contributions and earnings up to six months before retirement, thus locking in a minimum level for their monthly annuity. Asset management clients of the Brethren Foundation would use a stable-value fund primarily when they want to protect funds they know will be used in a relatively short period.

In other business the board approved a 2005 budget that calls for expenditures of $2,790,000; approved the recommended 100 percent housing allowance limit for pastors receiving pension annuities and disability benefits; authorized grants from the Supplemental Income Fund for Equitable Annuitants assets to former members of the equitable plan; and elected to explore the actions required for BBT to fulfill the spirit of the 2002 Sarbanes-Oxley Act placing stringent requirements on financial activities of publicly traded companies. While BBT is not subject to the act's provisions, the board expressed its desire to hold BBT's activities to the highest possible standards.

The board also received reports from the Brethren Foundation and the Church of the Brethren Credit Union. The foundation noted that its asset management clients represent all 23 districts in the Church of the Brethren. The foundation currently manages approximately $117 million, most of which represents asset management funds on deposit from about 200 congregations and other church agencies. The foundation also is responsible for numerous charitable trusts and charitable gift annuities.

Dennis Kingery, director of Credit Union Operations, reported that the credit union is engaged in an extended process of merging its existing internal controls with those already in place for BBT, and is exploring the possibility of offering members online access to their accounts.

The BBT Board will meet next in Elgin, Ill., April 16-17. For more information see www.brethrenbenefittrust.org.

Source: 01/21/2005 Newsline
top