The National District Council Meeting, open to all members, included an important discussion on the Life Membership Fund. Past National President Linda Meader spoke on behalf of the Audit Committee and explained how the fund works and what needs to change about the payout system.
When the fund was initially set up,
the percentage return on the principle was more than enough to cover the payout of $10.50, Meader explained. (The $10.50 is divided equally between the Auxiliary, Department and National levels.) For 26 years, the payout amount has not changed, and Life Member fees have not increased in that time. The actuarial fi rm Cottonwood Group, which does a review every fall, came back with fi ve areas of concern that have led to a signifi cant decrease of the Life Membership Fund over the past fi ve to six years:
1. Inadequate premium 2. Low-yield investments
3. Lower than expected death counts 4. Incomplete death reporting 5. Unsupportable payout levels
Meader further detailed that every year the actuaries give a recommen- dation for Life Member payouts to better refl ect the current yield on investments, members’ life expectancy rates and the fund’s status. For their 2010 review, Cottonwood Group strongly recommended that to maintain the viability of the Life Membership Fund, National Headquarters only pay out $7.10 per Life Member as opposed to the current $10.50. Meader said there were three options for the Council to consider: increase the Life Membership fees, immediately change to the actuaries’
recommendation or ease into the recommendation by lowering the payout over a three-year period. The fi rst option, Meader acknowledged, would not likely be accepted. The second option would leave many Auxiliaries with an unexpected shortage of funds. On behalf of the committee, Meader recommended that the Council approve the third option, which would give Auxiliaries time to re-adjust their budgets to the payout. Also, from the fourth year on, National Headquarters would abide by the recommendation of the actuaries to make sure the fund stays healthy in the future. Depending on all the factors that the actuaries review, the per-member payout could go up or down, and Auxiliaries would be notifi ed as to the amount. After questions from the Council members, Meader moved on behalf of the committee to use a three-year plan to reduce the Life Member payout, with the provision that Headquarters use the actuary recommendation from year four forward. It was approved by the Council. Here is what to expect:
LIFE MEMBER PAYOUT REVISION SCHEDULE
September 2011 Payout: No change for 2012 dues year
September 2012 Payout: $9.45 for 2013 dues year ($3.15 on each level)
September 2013 Payout: $8.40 for 2014 dues year ($2.80)
September 2014 Payout: $7.35 for 2015 dues year ($2.45)
September 2015 Payout: Actuary recommendation from the November 2014 evaluation for the 2016 dues year.
MAY 2011 5
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36