This was such a great question from one of my pastors. I had done a post earlier on understanding the pension liability, but I didn’t do a great job on tying it back to the church. Why would a church that faithfully pays their pension bill every month have to pay more if they vote to leave the denomination?
Pensions is all about numbers. The more lives you have covered in a pension program, the more opportunity there is to reduce costs and spread out risk. Think of it as a group discount. Because your church is part of this massive United Methodist group, you receive a group discount on the pension cost for your pastor. As churches leave the group, the risk that could be supported by such a large group is now being supported by a smaller group. Long story short, a leaving church is being asked to repay their group discount.
In the video, I go over this. As a bonus, I walk you briefly through the exact process of calculating the pension liability for each church.
- Previous post on Pension Liability: https://jctaccounting.com/2022/04/01/understanding-the-umc-withdrawal-liability-for-pension/
- Statistical Database for Dakotas UMC: https://www.dakotasumc.org/finance-and-benefits/statistics/statistical-database