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General

1. How does the CPF Board determine whether a COLA is granted?

The CPF Board may grant a COLA under select Plans* when inflation justifies it and the financial condition of the relevant Plan permits it. For guidance on inflation, it has been our practice to look to the US Bureau of Labor Statistics’ Consumer Price Index, which also is the basis for the US Social Security Administration’s annual COLA determination used for Social Security benefits.

To evaluate the financial strength of its Plans, CPF regularly stress tests them using sophisticated financial models to determine whether each Plan can support the granting of a COLA without compromising its financial strength over the long term.

In its final decision-making, the CPF Board weighs carefully the results of these analyses because, when a COLA is granted, it results in increased payments to all retirees and beneficiaries in perpetuity, thus creating a permanent liability (or strain) on the applicable Plan. These tests are designed to protect the long-term viability of the Plans and to ensure the continuity of pension payments received by participants and beneficiaries.

* The Church Pension Fund Clergy Pension Plan (and certain related plans), The Episcopal Church Lay Employees’ Retirement Plan, and International Clergy Pension Plan.

2. Why do you consider the US Bureau of Labor Statistics’ Consumer Price Index when determining whether to grant a COLA?

The CPF Board relies on outside experts and resources to determine whether economic conditions with regard to inflation support an increase in benefits. For guidance on inflation, it has been our practice to look to the US Bureau of Labor Statistics’ Consumer Price Index because it is the most well-recognized and objective measure available. It is also the basis for the US Social Security Administration’s annual COLA determination used for Social Security benefits. The CPF Board realizes that the Consumer Price Index may not be a perfect proxy for retiree living expenses in every case, but the CPF Board continues to see value in referring to it when making its COLA decisions.

3. How does CPF ensure that a Plan* has the ability to grant a COLA?

When a COLA is granted, it results in increased payments to retired participants and beneficiaries in perpetuity, thus creating a permanent liability (or strain) on a Plan.

To evaluate the financial strength of its Plans, CPF regularly stress tests them using sophisticated financial models to determine whether each Plan can support the granting of a COLA without compromising its financial strength over the long term. In its final decision- making, the CPF Board weighs carefully the results of these analyses. These tests are designed to protect the long-term viability of the Plans and to help ensure the continuity of pension payments received by participants and beneficiaries.

The CPF Board also discussed the possibility that future COLA determinations for our Plans may deviate from the Social Security Administration’s annual COLA determination. If we find ourselves in a sustained period of inflation and/or experience muted market returns, the Clergy Pension Plan and certain related plans may provide a benefit adjustment that is less than that provided by Social Security to help manage their long-term financial strength. As always, the granting of any COLA is entirely discretionary and subject to the CPF Board’s determination that the financial condition of the relevant Plan can support it.

* The Church Pension Fund Clergy Pension Plan (and certain related plans), The Episcopal Church Lay Employees’ Retirement Plan, and International Clergy Pension Plan.

The Episcopal Church Lay Employees’ Retirement Plan (Lay DB Plan)

4. What prevents the Lay DB Plan from paying a COLA?

CPF uses a sophisticated set of financial models and actuarial tools to determine the level of assets in the Lay DB Plan necessary to satisfy its current and future benefit obligations. This testing includes traditional actuarial cost methods that involve a variety of assumptions, such as the number of individuals in the plan and these individuals’ retirement ages, compensation levels, and life expectancies.

Compared to The Church Pension Fund Clergy Pension Plan (Clergy Pension Plan), which has approximately 5,600 active participants as of January 2023 and was created in 1917, the Lay DB Plan is relatively small. It was created in 1980, meaning that it has had much less time to accumulate investment income and to reinvest that income. In addition, as of January 2023, the Lay DB Plan has approximately 935 active participants (about 8% of the total eligible active lay employee population).

Lastly, it was not until 2006 that the Lay DB Plan had access to the full range of asset classes available to the Clergy Pension Plan. While gaining access to this broader range of asset classes has had a positive impact on the growth of the assets in the Lay DB Plan, our stress tests have shown that the granting of a COLA at this time would compromise its financial strength over the long term.

For additional details on the Lay DB Plan’s financial status, see the CPG Annual Report.

5. When was the last time The Episcopal Church Lay Employees’ Retirement Plan paid a COLA?

The CPF Board last approved a COLA to retirees and beneficiaries in the Lay DB Plan in 2009. To evaluate the financial strength of the Lay DB Plan, which is a newer, smaller plan than the century-old Clergy Pension Plan, CPF regularly stress tests it using sophisticated financial models to determine whether it can support the granting of a COLA. Unfortunately, our analyses indicate that the granting of a COLA at this time would compromise the Lay DB Plan’s financial strength over the long term.

We know this is disappointing news to retirees and beneficiaries of the Lay DB Plan. However, we hope you trust that it is the best decision we can make to protect the long-term viability of the Lay DB Plan and the continuation of pension payments that participants and beneficiaries receive.

For additional details on the Lay DB Plan’s financial status, see the CPG Annual Report.

6. Do Church Pension Group employees receive cost-of-living increases?

CPG employees do not receive cost-of-living increases. Retired employees of CPG have not received a COLA to their pensions since 2009.

International Clergy Pension Plan (ICPP)

7. Can you explain the benefit adjustment analysis that was performed for the ICPP?

In an effort to determine whether ICPP retirees and beneficiaries living in a particular country have experienced a loss in purchasing power, we perform a periodic benefit adjustment analysis every three years and make benefit adjustments when there has been a loss in purchasing power due to US inflation’s not fully accounting for the impact of local inflation and exchange rates, with any such adjustment being capped at 5%. This benefit adjustment is in addition to any annual, discretionary COLA granted by the CPF Board. For further details, please visit cpg.org/ICPP.

The most recent benefit adjustment analysis examined the purchasing power of ICPP retirees and beneficiaries between October 1, 2020, and September 30, 2023, by country. If retired clergy or beneficiaries residing in a particular country were found to have suffered a loss in purchasing power, they are receiving a purchasing power adjustment, effective January 1, 2024. Any clergy member who retired prior to January 1, 2024 (or their beneficiary) is receiving the adjustment if the retiree or beneficiary resides in the applicable country. The next purchasing power adjustment analysis will be conducted in 2026.

8. In what countries did individuals receive a purchasing power adjustment?

The CPF Board granted a purchasing power adjustment effective January 1, 2024, to retirees and beneficiaries living in the following countries:

Country	COLA	Purchasing Power Adjustment	Total Benefit Increase for 2024
Brazil	3.2%	5.0%	8.2%
Colombia	3.2%	2.7%	5.9%
Costa Rica	3.2%	3.7%	6.9%
Cuba	3.2%	5.0%	8.2%
Dominican Republic	3.2%	4.9%	8.1%
Haiti	3.2%	5.0%	8.2%
Honduras	3.2%	2.5%	5.7%
Nicaragua	3.2%	0.7%	3.9%
Venezuela	3.2%	5.0%	8.2%

 

9. Will CPF perform a periodic benefit adjustment analysis in the US?

We will not perform a periodic benefit adjustment analysis to account for purchasing power loss in the US because the CPF Board already takes into account US inflation when determining the annual COLA.

It has been the practice of the CPF Board to look to the US Bureau of Labor Statistics’ Consumer Price Index as a benchmark to guide its thinking on inflation. Many other organizations, such as the US Social Security Administration, look to the Consumer Price Index when making decisions about COLAs.

 

For more information on these and other benefits offered through the ICPP, please visit cpg.org/ICPP and the CPG website in Spanish, cpg.org/espanol, where we continue to make more materials and resources available in Spanish.