Memorandum Number 585


October 22, 1987

The Establishment of a Pension Escrow Fund to Divert Funds from the General Board of Pensions.


Both the 1987 Southern New England Annual Conference and the 1987 New York Annual Conference adopted resolutions which expressed their dissatisfaction with the General Board of Pensions' investment policy.

The resolutions were critical of the general agency because it had not divested its interests from corporations that are doing business in South Africa. The resolutions required that an alternative pension program would be established by December 31, 1987 so that those persons dissatisfied with the general agency investment policy could invest in an alternative program.

At an oral hearing on October 22, 1987, two representatives from the New York Conference, John Collins and Richard S. Parker appeared as did James M. Walton-Myers of the General Board of Pensions.

The 1984 Discipline is quite clear in its structure, organization and instructions to the General Board of Pensions for its administration and operation. (See 1601-1609.) It places the general supervision and administration of the pension and benefit funds, plans, and programs of The United Methodist Church under the control of that board, with authority to establish, maintain, or discontinue auxiliary offices as it deems advisable. (See 1601.)

No mandate is provided regarding specific investments except as suggested in 1604.4 "The board is encouraged (emphasis added) to invest in institutions, companies, corporations, or funds which make a positive contribution toward the realization of the goals outlined in the Social Principles of our church, subject to other provisions of the Discipline, and with due regard to any and all special contracts, agreements and laws applicable thereto." Full authority to make such investments as it deems prudent rests with the General Board of Pensions.

An Annual Conference does not have the authority to take any actions that would nullify in whole or in part the pension plans and programs of The United Methodist Church. (1606.11.) This position was also upheld in Decision No. 218 where a tax sheltered annuity trust fund was held to be unconstitutional because the Discipline did not authorize any such variation in the pension plan. See also Decision 577.

Despite the laudability of the goal-to achieve racial parity-an Annual Conference does not have the authority to establish and administer a separate ministerial pension fund. The efforts to establish an alternative pension plan should be addressed to the General Conference.

We find no legislation nor authority in the Discipline for an Annual Conference to divert contributions into an Escrow Fund.

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