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Decision No. 428

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October 28 1977
In Re: Request of General Board of Pensions for a Declaratory Decision on the Meaning and Application of Paragraph 1706.4(i) of The Discipline, Dealing with Pension Schedules for Ministers who take Early Retirement under 434.5.

Digest of Case

Paragraph 1706.4(i) provides for early retirement, the rate (percentage of pension) of which remains constant.

Statement of Facts

The General Conference of 1976 approved Paragraph 434.5 of The Discipline enabling ministers to request retirement at age 62 with 30 years of service having been completed. The Paragraph provided for an "actuarially reduced pension" for persons granted early retirement under this legislation. The General Conference approved Paragraph 1706.4(i) establishing a formula for determining the "actuarially reduced pension" of a minister retiring under Paragraph 434.5, the calculation of said pension to be accomplished by the General Board of Pensions. The General Board of Pensions formally requested a declaratory decision of the Judicial Council interpreting Paragraph 1706.4(i). This action was voted February 17, 1977 and again on August 18, 1977. JURISDICTION The Judicial Council has jurisdiction under Paragraph 2515 of the 1976 Discipline. ANALYSIS The General Conference of 1976 adopted legislation enabling voluntary retirement for ministers before age 65 and without at least 40 years of service with annuity credit. The specific new idea was to allow early retirement with a pension to be reduced from the full pension (years x rate) available at age 65 and/or 40 years service. The formula enacted provided a percentage reduction of pension for each month or fraction of a month prior to age 65 or 40 years of service. The General Board of Pensions was charged with the responsibility of determining the percentage based on the formula. In the process of interpretation and application of the formula the General Board of Pensions revealed uncertainty concerning the constancy of the reduced payment until normal retirement age 65 or 46 years service had been attained and thereafter. Subsequently the General Board appealed to the Judicial Council for a declaratory decision and offered several practical suggestions to relieve what they conceived as a dilemma. Much of their appeal related to the "intent" of legislation as expressive of the "philosophy" of the General Board and assumptions based thereon. References to "intent" and "philosophy" are understandable in a pragmatic sense. However, the decision and application must be based on the legislation actually approved by the General Conference. Such legislation in Paragraph 434.5 allows the voluntary early retirement at age 62, etc.; subject to the affirmative vote of the ministerial members of the Annual Conference. Paragraph 1706.4(i) provides for the reduction in pension payments at the time the early retirement becomes effective. The General Board of Pensions infers certain additional options in terms of equity and fairness. Such extrapolations are understandable but they are not contained in, nor necessary to, the wording of the legislation itself. The Council sought supporting data to discover debate or discussion about the intent of the legislation. However, the Daily Christian Advocate contains no record of any discussion of the legislation on the floor of the General Conference. We therefore interpret only the words that were adopted. While the Annual Conference and the General Board of Pensions are granted certain latitude in the application of various items regarding retirement, credit for service and pensions, that latitude is not granted in Paragraph 1706.4(i). Further, the use of the phrase "actuarially reduced pension" is not accurate since the provision is for a fixed mathematical formula based on limited years of service rather than factors relating to life expectancy.


Paragraph 1706.4(i) requires the application of the formula and percentage of the reduced pension to remain constant from the effective date of early retirement. Increases in the rate approved by the Annual Conference inure to the benefit of the early retiree on the basis of the constant percentage of reduction. Gene E. Sease was absent.

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