Employer Costs for 2006

Employers will hear more about costs of The Church’s Plan in an upcoming mailing of a new Benefits Bulletin for employers. We heard in focus groups that costs are a concern for you, and we want to address these concerns fully. Here’s an overview of what you should expect.

• The cost of health care—The story isn’t new, but the headlines continue. The rising cost of health care is a problem for employers, workers, and retirees nationwide. At Concordia Plan Services, we’re doing what we can to address these costs by managing our Plan well while still providing quality medical coverage to Church workers and retirees.
  
  For 2006, we expect the cost of the Concordia Health Plan (CHP) to increase only 6% to 8%.

• The cost of the retirement program—At Concordia Plan Services, we’ve been good stewards of the pension plan. Our plan continues to be soundly funded from an actuarial standpoint—despite the fact that we haven’t increased employer contributions to the plan in about 23 years. In fact, as of the beginning of 2005, the plan met all of its funding objectives and the plan assets exceeded by 18% the benefits that had been earned. That means our pension plan is safe, and workers participating in the plan can be assured that their benefits are secure.

Concordia Plan Services has made good investments with your pension contributions. During the late 1980s and 1990s, the stock market performed well, and our pension plan benefited. Employer contribution rates decreased three times—in 1986, 1991, and 1994. While rates were stable, Concordia Plan Services increased pension payments to retirees seven times, death benefits for members and dependents were increased, and the Supplemental Retirement Account (SRA) was added to boost retirement income.

Unfortunately, the strong market environment of the 1990s has changed in recent years, and the future investment market isn’t expected to be like that of the past. In order to support retirement bene€ts earned by LCMS workers in the long term, including the new bene€ts being added, employer contribution rates for the retirement program need to increase by about 3 – 4% of worker compensation over the next few years. The increases will be phased in starting in 2006 and will be approximately 1% per year.

While there will be some cost increases, a recent study found that our retirement plan contribution rates are significantly lower than those of other large church bodies. Even with the addition of the new bene€ts, our rates will remain below these other pension plans, and LCMS employers can be confident that they are providing needed financial security to their workers for a reasonable cost.

More information will be coming in the next few weeks. Watch for it soon.