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Aged Ministers’ Fund

The beginnings of Church of God care for aging ministers started at the 1929 Annual Assembly with the creation of a committee designed to look after the needs of, and to provide comfort to, older and retired ministers. The Council of Twelve established what became the Aged Ministers’ Fund at the 1930 Assembly. The above-mentioned committee had oversight over the fund until 1932 when the Council of Twelve took over the administration. A formal payment plan was implemented at the 1934 Assembly and in 1935 eligibility requirements were established for receipt of benefits. The plan continued to be formalized in succeeding Assemblies.

In 1946 the calculations for amount of pension for retiring ministers were set very precisely. The minister was to receive one dollar for each year of service and one per cent of average monthly income. The cap for the monthly pension was set at $100.00. Also in that year, the rule was instituted that stated that ministers who ceased their ministry forfeited all rights to participation in the fund either by contribution or retirement benefits. If they reactivated their ministry in future years, their time of service calculations began at the time of reactivation. In 1956 these calculations were revised to two dollars for each consecutive year of service plus the one per cent of their average income with the cap increased to $150.00 per month.

Until 1958 ministers who earned $50.00 per month or more in ministerial income were to send in one per cent to the Aged Ministers’ Fund. That amount was changed to two per cent at the 1958 Assembly and three per cent in 1962. Also at the 1962 Assembly the annual Reformation Sunday offering was instituted. At the 1974 Assembly the monthly percentage for contributions was increased to four per cent of the minister’s monthly income. In the 1976 Assembly the pension calculations were increased to $2.30 for each year of service and one per cent of average monthly income. The maximum withdrawal amount was increased to $200.00.

In January 1977, the Reverend O. Wayne Chambers made a presentation to the Executive Council encouraging the creation of a separate Pension Department at the Church of God General Headquarters. The recommendation was not accepted at that time, but Reverend Chambers’ presentation planted the first seed from which the Church of God Benefits Board grew.

Church of God Ministers’ Retirement Plan

The 1980 General Assembly directed the General Overseer to appoint a task force to study the Aged Minister’s Pension Plan and prepare a report and present recommendations at the 1982 Assembly. The five-member Task Force (Dr. Robert White, Chairman; O. Wayne Chambers, Dr. James A. Cross; Dr. Paul L. Walker, and Attorney John White) presented a recommendation that a new pension plan be put into place that would replace the older Aged Ministers’ Fund. This recommendation was adopted by the 1982 Assembly and officially began in January 1983. The Reverend Julian B. Robinson was appointed as the first director of the plan and served until 1988 when the Reverend O. Wayne Chambers was appointed as the Director of the Ministers’ Retirement Plan (MRP).

The new plan was established under Section 403(b)(9) of the IRS code as a separate trust known as the Church of God Ministers’ Retirement Plan and was administered by the Executive Council who constituted the Board of Trustees for the Plan. The retirement benefits accrued under the previous plan were frozen at the 1982 level. Those with at least 37½ years of service were given full credit under the former Aged Ministers’ Plan.

Church of God Benefits Board, Inc.

A. Creation of the Benefits Board, Inc.

By 1993 concerns were mounting about the retirement plan money being commingled with other Church of God funds. The concerns centered on the protection of the pension fund’s assets from the claims of the church’s creditors. Many reports had circulated about multi-million dollar settlements and judgments against major church entities. Then General Overseer R. Lamar Vest appointed a committee in January 1993 to study the creation of a separate entity to oversee the pension funds. The committee consisted of Floyd H. Lawhon, Chairman; Raymond F. Culpepper; Raymond E. Crowley; O. Wayne Chambers; and Robert E. Fisher, liaison. The committee was initially given the task “to do an impact study on the separation of the pension funds and report back to the next Executive Council session.” The Council approved the resulting report and directed the committee to continue their work and prepare an incorporation document for presentation to the January 1994 session of the Executive Council.

The summary of the above-mentioned report says, “The recommendation that a corporate benefits trust be established, as a controlled affiliate of the Church, to administer and protect plan assets (separate and apart from Church assets), would require the General Executive Committee to appoint qualified laymen and clergy of the Church for volunteer service on an 8 person Board of Trustees, with terms to provide for continuity of management and administration of the amended and restated plans and funds.” The Executive Council adopted the report in their January 1994 meeting. In that meeting the Council adopted a resolution to authorize the incorporation of the Church of God Benefits Trust, Inc., and appoint trustees. They appointed the following persons to serve on the initial Benefits Trust Board of Trustees:

Name Term of Office
1. Bill Hildreth 6 years
2. Jerry Dixon 4 years
3. J. T. Jones 1 year
4. David M. Painter 2 years
5. Robert Fisher 1 year
6. David Bishop 1 year
7. Ray H. Hughes 3 years
8. W. W. Thomas, Sr. 5 years

In the initial meeting of the Board of Trustees, Bill Hildreth was elected as Chairman of the Board and Ray H. Hughes as Vice Chairman. They also elected the Reverend O. Wayne Chambers as the first President and CEO and Sandra Mills as the Corporate Secretary. It was determined before the August 1994 meeting that the name “Benefits Trust” would be an inappropriate name for the newly formed corporation since it would not be functioning in the legally defined role as a “Trust.” Therefore, the new name of “Church of God Benefits Board, Inc.” was adopted.

Walter P. Atkinson was elected as Church of God General Secretary Treasurer at the 1994 Assembly, and by virtue of the Benefits Board bylaws was appointed to the Board of Trustees, replacing Robert Fisher. Prior to the November 1994 meeting, Reverend Ray H. Hughes, then Assistant General Overseer resigned from the Board of Trustees because as a member of the Executive Committee he was concerned of the perception by the participants of the MRP regarding the actual separation of the Board from the Church of God International Offices. Reverend B. J. Moffett was appointed to replace him on the Board, and in the November 1994 meeting W. W. Thomas was elected as Vice Chairman of the Benefits Board.

In May 1995, J. T. Jones was hired as the Loan Administrator to manage the church loan portfolio. Because of a need for additional space and because of a desire to physically put up a “wall of separation” between the church and the Benefits Board, the offices of the Board were relocated to 2906 North Ocoee Street in Cleveland in August 1995 with the purchase of the Board’s first office building.

The Board of Trustees elected J. T. Jones to be Vice President of the Benefits Board in the November 1995 meeting. Therefore, Mr. Jones relinquished his seat on the Board and Dennis W. Watkins, legal counsel for the Church of God, was appointed to fill the vacancy. Arvel Burrel was appointed to the Board after the 1996 Assembly, replacing David M. Painter. Tony Scott was also appointed to the Board as replacement for David Bishop. Bill Sheeks was elected as General Secretary Treasurer for the denomination and by virtue of that election was appointed to the Benefits Board per Board bylaws, replacing Walter P. Atkinson. W. W. Thomas passed away in April 1997 and Lamar Vest, an Assistant General Overseer, was appointed as his replacement. Since Brother Thomas was the Vice Chairman, a replacement was needed and Jerry Dixon was elected as the new Vice Chairman at the April 1997 Board of Trustees Meeting.

B. Leadership Changes at the Board

The Board Chairman, Bill Hildreth, passed away in October 1997. Waymon W. Thomas, Jr. was appointed to the board to fill the vacancy. In a special called October 1997 meeting, the Trustees elected Jerry Dixon as Chairman of the Board and B. J. Moffett as Vice Chairman.

The October 1998 meeting also marked some major changes in the structure of the executive staff of the Benefits Board. J. T. Jones was promoted to Executive Vice President, Stephen Mills was elected to serve as Vice President, and Sandra Mills announced her resignation as Corporate Secretary effective in early 1999. After the October 1998 meeting, the Reverend O. Wayne Chambers announced his decision to retire also in 1999.

Action was then taken by the Board to find replacements for the President and CEO and for the Corporate Secretary. At the February 1999 Board Meeting, Gayla McCalister was officially elected as the new Corporate Secretary. After a long search by a specially appointed committee, the Board of Trustees met in a special called meeting on February 17, 1999 and hired Arthur D. Rhodes, an attorney, as the new President and CEO of the Benefits Board effective March 1, 1999. At the time of the new President’s hiring, assets of the Board totaled $108 million.

C. New Offices for Board

Because the number of participants was growing monthly and the storage and workspace needs of the office staff were increasing, the building on 2906 North Ocoee Street had quickly become inadequate to meet the needs of the growing company. A property search committee from the Board of Trustees had searched out and the Board had purchased vacant land in Cleveland on which to build a new office building. However, as discussions continued over the type and size of building to build, a doctor’s office at 4205 North Ocoee Street became available. The Board determined that these offices would meet the Board’s needs with little modification. The building was purchased and the Board officially moved into the new building on April 14, 2000. The building at 2906 North Ocoee was sold.

D. Diversification of the Plan Assets

Due to the rapidly growing fund, and participant demand for more self-direction, in July 1999, Everen Securities (later to be merged with First Union) was hired to be Investment Consultants and the Board opted to begin the process of allowing participants of the Plan to diversify and self-direct their contributions. At the November 1999 meeting of the Board of Trustees, a new plan document was adopted to allow participants, if they so directed, to invest in equity (stock) accounts. An Investment Policy Statement was also adopted at this meeting. The self-directed funds became operational on July 1, 2000. All funds contributed prior to that date were “frozen” in the Trustees’ Fund until further action of the Board. However, all contributions after July 1, 2000, could be directed into one or more of the four accounts available.

Beginning in July 2002, the assets “frozen” in the Trustees’ Fund in July 2000 began to be “allocable.” Since that time, participants have been allowed to allocate their pre-July 2000 funds at a rate of 2.5% per quarter (10% per year) into the new investment options if they so desire. If a participant makes no selection concerning pre-July 2000 funds as they become available for allocation, the default allocation leaves the money in the Trustees’ Fund. Under this plan of dealing with pre-July 2000 contributions, all contributions will be “participant directed” by 2012. However, the Board’s desire is to accelerate this process and make all contributions “self-directed” in a shorter time period. As previous noted, all contributions received by the Board after July 1, 2000 are currently “self-directed” by the participant.

E. Equity Fund Managers

The equity fund managers for the new diversification plan were selected in a special February 2000 meeting of the Board. The managers selected were SunTrust Bank (later to become Trusco Capital Management), large capitalization stock manager; Wentworth, Hauser, & Violich, small capitalization stock manager; and Nicholas-Applegate, international stock manager. The Trustees’ Fund, the original vehicle of the Ministers’ Retirement Plan, was the fourth investment option. The Trustees’ Fund was set up to operate like a fixed income account, with its’ primary investments being first mortgage church loans and bonds (government, agency, and corporate bonds). Initially, over 22% of the Board’s almost 4000 participants chose to make some investments into at least one of the equity accounts.

F. Trustees

Following the 2000 Church of God General Assembly (at which time Board members are appointed), the Board of Trustees had several new faces. Gene Rice came on the board because of his election to the position of General Secretary (now called Secretary General) of the Church of God, replacing Bill Sheeks who had previously served in that position. However, Dr. Sheeks did not leave the board but rather assumed the board position previously held by R. Lamar Vest. Dr. Vest was elected as General Overseer at the 2000 General Assembly and thus needed to give up his seat on the Board due to his other commitments. In addition, David Bishop left the Board because of his retirement from pastoring. He had occupied the “pastor’s position from the Executive Council” and became ineligible for that Board position once he left his pastorate. Horace Ward, pastor of the South Cleveland (TN) Church of God at that time (and later pastor of Easton, MD Church of God) was appointed to replace Dr. Bishop. Dr. Ward was a pastor and a member of the Church of God Executive Council. The final new appointee to the Board was Dudley Pyeatt. Mr. Pyeatt, the former auditor for the Church of God International Offices, replaced Arvel Burell. Mr. Burell had become ineligible to continue in his current capacity on the board as a layman when he was ordained into the ministry. Until his retirement in 2003, Mr. Burell served as the Executive Pastor at the Mount Paran Central Church of God in Atlanta.

Therefore, for the 2000-2002 General Assembly period, the Board of Trustees of the Church of God Benefits Board, Inc. were as follows:

Laymen
Mr. Jerry Dixon, Chairman
Mr. Dennis Watkins, Esquire
Mr. Waymon Thomas, CPA
Mr. Dudley Pyeatt

Ministers
Reverend B. J. Moffett, Vice-Chairman
Dr. Bill Sheeks
Dr. Gene Rice
Dr. Horace Ward

The same board members served during the 2002-2004 General Assembly period.

At the 2004 General Assembly, Dr. Gene Rice and Dr. Horace Ward left the Board due to the change in their denominational positions. As the new Secretary General, Rev. Tim Hill replaced Dr. Rice and Pastor Gerald McGinnis of Knoxville replaced Dr. Ward in the “pastor’s position from the Executive Council.”

In November 2004, Waymon W. Thomas, Jr. announced his resignation from the Board to concentrate his efforts on other ministry opportunities. Mr. Thomas was replaced on the Board by the appointment of Herbert Buie of Tyler, Texas. Mr. Buie’s appointment was effective in late December 2004.

G. Merrill Lynch Hired as Consultants to Board

After the transition into the diversified accounts were completed, Merrill Lynch was selected in February 2001 to serve as the Board’s investment consulting firm to assist with the monitoring of the diversification fund managers. Charles “Chappy” Hollis and Stewart Anderson of Merrill Lynch’s Brentwood, Tennessee office became the Board’s institutional equity consultants.

H. Board Complies with New Tax Laws

At the Board’s November 2001 meeting, the plan document was revised to comply with the Economic Growth and Tax Relief Reconciliation Act of 2001, greatly expanding the contribution limits under the plan. The plan document changes were made by the Board’s attorney, the Honorable Gary Nash. Mr. Nash initially prepared the documents creating the Benefits Board in 1994. At the time of the 2001 changes, Mr. Nash was serving as counsel in the compensation and benefits practice of the accounting firm of KPMG in Dallas, Texas. Mr. Nash is now in private law practice in the Dallas area.

At the same meeting, the Investment Policy Statement of the Board was amended to incorporate more safeguards in the management of participant assets. The Investment Policy Statement was drafted under the directions of Merrill Lynch (Steve Hammers and Chappy Hollis) and with direct input from the Board and staff of the Benefits Board and with consultation from attorney Gary Nash.

I. Board Adds Bond Managers

After back-testing the results of performance of internal management of the bond portfolio within the Trustees’ Fund, the Board made the decision in early 2002 that additional return could be picked up by hiring bond managers to manage the growing bond portfolio. In addition, outside bond managers would lessen the liability of the Board brought on by internal management of the largest asset class within the Board’s total portfolio.

After an extensive manager search process, three bond managers were hired:

Seix Investment Advisers – short-term bond portfolio
Allegiance Capital – intermediate/core bond portfolio
Strong Capital – Intermediate/core bond portfolio

All three managers began managing bond portfolios for the Board in June 2002.

J. Board Adds REIT Manager

In November 2003, the Board made the decision that the assets of the Trustees’ Fund needed to be further diversified. Based upon that decision, Principal Financial Group was hired in early 2004 to manage a real estate investment trust (REIT) portfolio for the Board. The REIT portfolio, along with the three bond portfolios and the church loan portfolio, comprise the Trustees’ Fund.

K. Prime Plus Church Loan Feature Added

At the Board’s Fall 2003 meeting, a proposal to offer adjustable rate mortgage loans to churches was adopted. The new loan program was dubbed the “Prime+” program because the rate adjusts based upon the prime interest rate plus 1%. The Prime+ loan program was offered as an addition to the 20-year fixed rate mortgages that had been the mainstay of the Board’s church loan program.

L. Member Loan Program Added

A program allowing participants to borrow against their retirement account was approved by the Board in November 2004 and became operational January 2005. Based upon the IRS regulations, the minimum loan amount is $1,000 while the maximum loan is $50,000 or one-half of the participant’s account balance, whichever is less. In addition, the loan must be repaid by monthly bank drafts within five years. An application fee of $100 is charged to all applicants. Those drawing out of their accounts by installment payments are not allowed to apply for a loan.

The interest rate for Member loans is fixed for the life of the loan at the rate approved by the Board of Trustees of the Benefits Board and in effect at the time the loan is approved. Any interest collected above and beyond the amount stated by the Board to be returned to the participant’s account will be used by the Benefits Board to cover the expenses of administering the loan program. The initial interest rate set by the Board for Member loans was 6.5% with 4.5% to be returned to the participant’s account and 2% to be used by the Board to cover the expenses of the Member loan program. In May 2005, the Board changed the rate to 7.0% with 5.0% to be returned to the participant’s account and 2% to be used by the Board to cover the expenses of the Member loan program.

M. Changes in Equity Managers

As of July 1, 2005, the Benefits Board hired three new investment companies to manage stock accounts for its’ participants.

NWQ Investment Management Company of Los Angeles was hired to be the Board’s new international stock manager. NWQ replaced Nicholas/Applegate who had served in that role since July 2000. Nicholas/Applegate notified the Board in April that as of July 15 they would no longer be managing separate accounts in the international space. After an extensive manager search and after interviews by the Board’s Investment Committee, NWQ was hired. The funds at Nicholas/Applegate were transferred to NWQ and the international portfolio is now being managed by NWQ.

The Board also made a change in its’ large capitalization manager. Since July 2000, SunTrust Bank and its’ investment management firm, Trusco Capital, had managed the Board’s large cap fund for participants. Early on, Trusco excelled in managing the portfolio. However, in the past couple of years, they had lagged behind their counterparts in the large cap space. After working with Trusco for well over a year and putting them on notice that the Board was not satisfied with their performance relative to their benchmark (the Russell 1000), the Board made the decision in May 2005 to terminate Trusco and replace them with two managers – a pure “growth” large cap manager and a pure “value” large cap manager.

Again, after much research and interviews, the Board’s Investment Committee hired Eagle Capital Management of New York as the new large cap “value” manager and Rigel Capital of Seattle as the new large cap “growth” manager. While there are two managers in the large cap space, participants will not be choosing between value and growth at this time – but rather will continue to just choose to invest in the large cap space. The large cap contributions will be divided by the Board into the two accounts and the returns will be combined to provide performance reporting to participants.

N. Timberland Managers Added to Trustees’ Fund

In May 2005, the Board made a commitment to invest in timberland. After interviews with timberland managers, the Board’s investment committee recommended that instead of investing in just one timberland fund that the Board invest in two separate funds. The Board committed funding to a diversified timberland fund managed by Hancock Natural Resource Group and to a southern pine timber fund managed by AmSouth Bank/RSG Group.

O. Investment Reallocation Change

When the Board made different investment options available to participants in July 2000, the decision was made to allow participants to reallocate their investment choices only once a quarter – or four times a year. The Board’s decision on limiting reallocation was primarily based upon two reasons: (1) to allow the participants to learn about the investment choices and not purely be chasing return numbers and (2) to allow the Board’s staff to become accustom to the allocation process and establish accounting systems to allow for an audit trail when funds were reallocated. For the first five years, the Board allowed participants to change their allocation among the four different funds once a quarter – by the 1st day of the second month in the quarter (i.e. February 1, May 1, August 1, or November 1).

After receiving regular inquiries about why the Board did not allow participants to change their allocation on a more regular basis, the Board of Trustees voted in November 2005 to change the earlier policy. After January 1, 2006, participants in the Ministers’ Retirement Plan are allowed to reallocate their investment choices monthly if they so desire.

P. Summary

As of November, 2005, the Board had assets in excess of $212 million and more than 4600 active participants. Over 665 participants were receiving a monthly distribution from their assets held in trust by the Benefits Board.

(updated as of 12-15-05)