NOTE: The following information is in no way related to Church of the Brethren Pension Plan and annuities paid to its retirees.

At its November meeting, the Brethren Foundation Board adopted several changes to its charitable gift annuity program that will strengthen the program and protect the organization in the future. Payments to current gift annuity annuitants will not change, but remainder assets distributed to the recommended charitable beneficiaries may be reduced. New requirements will apply to new charitable gift annuities.

BFI expects the risk of its charitable gift annuity program to be contained within the program itself; the program can only continue if this expectation is fulfilled. The adjustments approved by the Board were proposed with that expectation in mind.

A “typical” charitable gift annuity program benefits the organization that issues the annuities and pools the assets of all annuities, with the remainder assets of annuities of those who die early remaining to help cover the commitment to annuitants who outlive their annuity assets. BFI’s program is different because instead of pooling assets, it distributes the remainder assets of each annuity to the charitable beneficiaries upon the annuitant’s death according to the donor’s recommendations. Accordingly, the remainder assets of annuities whose annuitants die early do not remain in the BFI annuity pool to help with the annuities whose assets are depleted. Depleted annuity payments are made from the general assets of BFI.

To prudently manage the risks inherent in the current program and protect BFI’s general assets, the BFI Board approved staff recommendations to initiate the following changes —

• A Loss Reserve Fund will be established. It will be funded by a 2 percent annual fee charged against each current and new annuity issued by BFI.
• This Fund will exist as long as the charitable gift annuity program exists, and it will only be used to pay annuitants for annuities whose assets are depleted.
• If the Fund becomes fully funded (or, if BFI ends its charitable gift annuity program), distributions to the remainder beneficiaries will be made appropriately.

Other changes to the annuity program include —

• Charitable gift annuities larger than $50,000 will be reinsured when issued.
• The minimum amount for a charitable gift annuity will be $5,000.
• Annuities issued on individuals younger than 65 years of age will receive an annuity rate that is 80 percent of the recommended maximum rate.

These changes are in effect immediately. Please contact Steve Mason, director of Brethren Foundation, to discuss BFI’s charitable gift annuity program.