Information Regarding Enhancements to LifeStage
Effective February 7, 2011, the General Board of Pension and Health Benefits of The United Methodist Church (General Board) implemented enhancements to the LifeStage Investment Management Service (LifeStage). These changes to LifeStage may have a significant effect on the allocation of the investments supporting your retirement account(s) managed by LifeStage. Changes include:
LifeStage will manage Ministerial Pension Plan (MPP) accounts separately from other defined contribution* (DC) accounts, resulting in different investment allocations for the different types of accounts.
Previously, LifeStage applied the same investment allocation to both MPP balances and other defined contribution accounts. Since clergy must convert at least 65% of their MPP account balances to monthly benefit payments when they elect to begin receiving payments, LifeStage will more quickly reduce the amount of equities held in MPP accounts as clergy approach the age at which they intend to begin receiving benefits. This change does not affect other defined contribution balances because LifeStage manages these accounts in a manner that assumes participants will rely on their DC account balances throughout retirement.
If a participant has elected LifeStage and the General Board does not have that person’s compensation information on file, LifeStage will use an assumed compensation value to project the value of future Social Security benefits (when applicable).
Most participants will be eligible to receive Social Security benefits upon retirement. For these participants, LifeStage will project the value of future Social Security benefits based on the individual’s actual or assumed compensation value. LifeStage will then consider this additional source of retirement income from Social Security when determining the appropriate investment mix.
In calculating the investment mix for defined contribution accounts, LifeStage will consider the value of other plans** administered by the General Board.
Consideration of these additional sources of retirement income will help LifeStage determine the best investment mix for participants' defined contribution balances.
Participants may see more rebalancing activity in 2011 compared to previous years, due to the LifeStage enhancements.
LifeStage calculates an optimal investment mix based on the information it has for each participant. This optimal investment mix is called a target fund allocation. Each month, LifeStage will compare a participant’s target allocation with the participant’s actual investment mix (which changes in real-time due to market fluctuations). If there is a significant difference between the participant’s target allocation and actual allocation, LifeStage will buy and sell units for each of the five General Board funds used for LifeStage-managed investments***. This process is called “rebalancing.”
In most cases, LifeStage will allocate new contributions to a single fund rather than to all five of the General Board funds in which LifeStage invests. LifeStage compares the actual amounts invested in all five funds to the target allocation for all funds. The fund selected will be the one in which the actual allocation is the furthest below the fund’s target allocation.
Investment Objectives that Support Participants’ Financial Future
The General Board regularly reviews LifeStage to ensure it is meeting overall investment objectives and to identify opportunities for improvement. LifeStage is one of the options participants have for managing their General Board-administered investments. Participants may want to consult with Ernst & Young Financial Planning Services about managing their investments, or with a professional financial planner of their choice. Ernst & Young Financial Planning Services are available at no cost to most participants in General Board-administered plans.
Click here for Frequently Asked Questions about the enhancements to LifeStage.
* DC accounts include the United Methodist Personal Investment Plan (UMPIP), the DC portion of the Clergy Retirement Security Program (CRSP), the Retirement Plan for General Agencies (RPGA) and Horizon 401(k) Plan (Horizon).
** Other plans include the Ministerial Pension Plan (MPP), Pre-82 Plan, Clergy Retirement Security Program (defined benefit portion), and Collins Pension Plan for Missionaries.
*** LifeStage invests in these General Board funds: U.S. Equity Fund, International Equity Fund, Stable Value Fund, Inflation Protection Fund and Fixed Income Fund.