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 one 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 granting a COLA results in increased payments to all retirees and beneficiaries in perpetuity, thus creating a permanent increase in the liability for 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.

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 the long-term financial strength of the Plans. 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 clergy plans), The Episcopal Church Lay Employees’ Retirement Plan, and the 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.

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

3. 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 Clergy Pension Plan, which was created in 1917, maintains an assessment rate of 18%, and has approximately 14,000 participants* (5,614 active and 8,320 retired), the Lay DB Plan was created in 1980, maintains a lower assessment rate of 9%, and has approximately 2,800 participants* (847 active and 1,952 retired). The Lay DB Plan has had much less time to accumulate investment income and reinvest that income. In addition, the Lay DB Plan is separate from the Clergy Pension Plan, and we are not able to utilize the assets of one Plan to pay benefits for the other.

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.

Accordingly, the CPF Board has decided that it would be imprudent to grant a COLA under the Lay DB Plan.

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

* As of December 31, 2023

4. 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 performs stress tests 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 this is the best decision we can make to protect the long-term viability of the Lay DB Plan and the continuation of pension payments to retirees and beneficiaries. For additional details on the Lay DB Plan’s financial status, see the CPG Annual Report.

5. Do Church Pension Group employees receive COLAs?

CPG employees do not receive COLAs. Retired employees of CPG have not received a COLA to their pensions since 2009.

International Clergy Pension Plan (ICPP)

6. Can you explain the benefit adjustment analysis that was performed for the ICPP in 2023?

Because US inflation may not fully account for the impact of local inflation and exchange rates on ICPP retirees and beneficiaries, we perform a periodic benefit adjustment analysis every three years to determine whether ICPP retirees and beneficiaries living in a particular country have experienced a loss in purchasing power. CPF makes benefit adjustments when there has been a loss in purchasing power due to US inflation 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.

We performed a purchasing power analysis in 2023 (covering the period beginning October 1, 2020, and ending September 30, 2023) and granted a purchasing power adjustment, effective January 1, 2024, to eligible retirees and beneficiaries living in certain countries. This purchasing power adjustment was in addition to the annual, discretionary COLA granted by the CPF Board that was also effective January 1, 2024. The next purchasing power adjustment analysis will be conducted in 2026, and the next purchasing power adjustment, if any, will be effective January 1, 2027.

7. In what countries did individuals receive a purchasing power adjustment in 2024?

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

8. 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.