LifeStage Streamlines Rebalancing Rules

The LifeStage Investment Management Service (LifeStage) allocates your account balances among General Board of Pension and Health Benefits (General Board) investment funds and offers automatic rebalancing—a proven strategy for ensuring that participant investment allocations do not significantly drift from the LifeStage-determined target allocation. A disciplined rebalancing approach seeks to control overall risk, leading to better risk-adjusted investment performance compared to programs without disciplined rebalancing.

Recently, a leading third-party consultant to the General Board completed a review of industry research examining rebalancing approaches. The General Board will implement recommendations identified through this research, evaluating all participant accounts quarterly and, when warranted, fully rebalancing accounts to their LifeStage target fund allocations.

While there may temporarily be increased transactions on quarterly account statements related to implementation, these changes will reduce transaction frequency over the long term, which may reduce administrative costs incurred by the funds.

Participants with questions can receive confidential, objective assistance at no charge through EY Financial Planning Services.* EY financial planners can explain the benefits of LifeStage and help determine if it continues to meet your participants‘ needs, or answer other questions related to retirement planning, investing, budgeting, saving and other financial topics. EY is available Monday through Friday from 8:00 a.m. to 7:00 p.m., Central time at 1-800-360-2539.

Additional information about the streamlined rebalancing rules and other LifeStage enhancements can be found in the Q&A at www.gbophb.org/lifestage-qa/.

* Costs for these services are included in the General Board’s administrative expenses that are paid for by the funds. Services are available to active participants and surviving spouses with account balances, and to retired and terminated participants with account balances of at least $10,000.

New Investment Fund Option

The General Board will introduce a new fund on May 29, the Extended Term Fixed Income Fund (ETFIF). ETFIF will primarily hold a broad selection of publicly traded fixed-income securities that typically have longer terms than securities held in the other General Board fixed income investment options. The fund will be available to participants in the United Methodist Personal Investment Plan (UMPIP) and other General Board-administered retirement plans, and to United Methodist-affiliated institutions. ETFIF will represent a sixth fund used within LifeStage.

For more information about the new fund, visit www.gbophb.org/assets/1/7/IFD-Supplement-ETFIF.pdf.

Stable Value Fund Changes

The total amount that LifeStage invests in the Stable Value Fund (SVF) will be significantly reduced after implementing the LifeStage enhancements. There are two main reasons that LifeStage will reduce the amount invested in SVF:

1. Many participants whose accounts are managed through LifeStage have longer investment time horizons. They are expected to benefit from exposure to higher current income available through ETFIF. They also are more able to accept the higher levels of risk associated with ETFIF’s greater sensitivity to changes in market interest rates.
    
2. Ministerial Pension Plan (MPP) participants are required to convert 65% of their MPP balance to an annuity at retirement. The monthly benefit payment from the annuity is determined based on market interest rates. ETFIF provides these participants with some protection against changes in market interest rates, which could adversely affect their monthly benefit payment amount.

As a result of the reduction of SVF, the General Board will make several changes to the fund’s structure and management. More information about these changes will be available in the coming months. The General Board will continue to offer the fund to participants, and will seek to maintain a fund unit value of $1.00.

Benefits Access Enables Participants to Apply for Benefits Online

The participant account management website, Benefits Access, has been continually improved since its launch in 2011. Many participants have embraced the site for finding updated information about their retirement plan account balances and changing investment elections. However, participants are not as knowledgeable about the most recent update to the site, which introduced functionality that allows participants to apply online for distributions from General Board-administered retirement plans.

Online applications—developed to streamline the application process—are easier and more interactive than paper forms. They walk participants through elections step by step, customizing the application as participants go along, so that they only see information and questions that are pertinent to their situations. Participants can also receive assistance with their online application from EY Financial Planning Services. When participants elect to authorize view-only access to their Benefits Access accounts, EY financial planners can walk through the application with them, explaining their elections in real time. The financial planners never have the ability to submit transactions on participants’ behalf and cannot view or update user preferences.

In order to help participants feel at ease with online applications, the General Board developed a short video to explain the advantages of—and review the process for—applying online for retirement benefits via Benefits Access.

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