By Lonnie Wilkey and Chris Turner
Baptist and Reflector
NASHVILLE — Despite concerns and rumors, current retirees of LifeWay Christian Resources over the age of 65 are not losing their pensions or medical benefits. However, the Nashville-based, publishing division of the Southern Baptist Convention will freeze its LifeWay Pension Plan effective Jan. 1, 2020 for current pension-eligible employees.
LifeWay Christian Resources announced changes to its retiree life insurance and pre-65 retiree medical benefits beginning Jan. 1, 2020. Most of the changes affect current employees and those who retired before age 65. LifeWay shared the changes in letters to current and future retirees on June 29. The changes were approved by LifeWay trustees at their February meeting.
Brad Waggoner, executive vice president for LifeWay, explained that the organization has been making incremental adjustments to retirement benefits since the 1990s in response to changing market conditions. Last month, six different letters were mailed to current and future retirees, depending on when they began employment and when they retired or will retire. Currently, there are approximately 4,000 people eligible for some retirement benefits from LifeWay. About 2,000 of these retirees receive a pension check each month.
The letters noted: “As LifeWay developed strategic plans for the future, we reviewed all revenue streams, expense spending and resources. Through this evaluation and planning, LifeWay has determined that in order to preserve the future of the pension plan and post-retirement benefit plan, some difficult decisions are needed.”
Current retirees over age 65 will continue to receive their medical supplement and pension amounts, Waggoner said. “We are not touching their pensions,” he stressed.
And, the pension fund is safe, Waggoner continued. LifeWay (then the Baptist Sunday School Board) made a decision decades ago to establish a trust fund to secure the pension payments, he said. Since 2003 LifeWay has contributed $140 million to that particular fund. Waggoner also stressed that money from the pension trust fund cannot be used for LifeWay operating expenses.
The only change that affects all retirees is that a life insurance policy with a maximum $20,000 death benefit has been reduced to $5,000, he added, acknowledging it may be difficult for older retirees to secure additional life insurance.
The changes do affect employees who took early retirement before the age of 65. LifeWay will no longer offer access to medical, prescription, dental and vision benefits to current and future retirees (nor spouses) who are not yet 65 years of age. When the employee or spouse turns 65 they will be eligible to receive a contribution to their Health Reimbursement Arrangement if they began their service at LifeWay prior to 2003. Those hired after 2003 are not eligible for an HRA contribution from LifeWay. Retirees who fall into that category fear they may not be able to secure insurance, according to concerns expressed to the Baptist and Reflector.
Waggoner noted that current employees hired before 2010 will be the group most impacted by the decision to freeze the pension plan. “It will have a significant impact on current employees who are pension eligible,” he acknowledged.
Employees hired after 2010 are not eligible for pension or retirement benefits such as medical and life insurance. “No new employee (even newly elected president Ben Mandrell) will receive a pension.”
However, all employees are eligible for a 401k account in which they make contributions with a matching amount from LifeWay, he added.
The decision in 2010 to end the pension for new employees was another cost-saving action that trustees felt necessary to secure the long-term financial viability of LifeWay, he added.
In a letter received by the Baptist and Reflector, a retiree asked why LifeWay cut retiree benefits when they continually report in meetings that “they are doing well.”
Waggoner noted, “As we reported to the Southern Baptist Convention in June, one of the biggest challenges to LifeWay the past few years has been the decline in retail. Over the last five years, we’ve lost nearly $50 million dollars through the operation of LifeWay Christian Stores, which resulted in the decision made earlier this year to close the brick-and-mortar stores,” Waggoner said. Waggoner delivered that report as acting president following the retirement of Thom Rainer. Mandrell was elected LifeWay president in July.
Waggoner explained the retail losses could no longer be sustained by the profitable side of LifeWay. “Our publishing and events ministry has historically been the backbone of LifeWay’s revenue and ministry and it continues to perform well, growing year over year,” Waggoner said. “The need for our resources has not diminished, but the way they are delivered is shifting and we are adjusting to meet the needs of our customers.”
Still, retirees who will be affected by the changes feel they were promised the benefits and believe they signed a “binding contract” when they retired. A retiree wrote, “Many retirees did not leave on their own. … They depend on those promises that were promised as most are uninsurable now.”
Waggoner explained that retirees are given a document when they leave that explains the amount of the pension they will receive along with other retiree benefits. In regard to the medical portion, it’s made clear that while LifeWay hopes to maintain the medical benefit, “it’s subject to change,” he said.
“The governing plan document very clearly states LifeWay has the ability from time to time to make changes as deemed necessary.”
Mandrell said he understood the concerns raised by retirees. “One thing that has become clear in my first 30 days is that LifeWay is a multifaceted company,” Mandrell said. “While we want to take care of current and former LifeWay employees, we also need to be good stewards of the ministry.
“LifeWay has had to make a number of difficult decisions this past year in response to shifts in the marketplace,” Mandrell said. “As difficult as these decisions have been, I believe our trustees have tried to reposition the company for future success while minimizing risks to our viability.”
Moving forward, Mandrell said he sees a hopeful future for the organization. “Every vibrant Christian ministry has to do two things — remain theologically robust and culturally relevant. We believe LifeWay is theologically robust, but the culture is always shifting, and we have to adjust our approach to reach people. We have incredible leaders who are working tirelessly to create a fresh strategy for a strong future for LifeWay.”