Understanding the critical differences between Faith-Based and Secular Retirement Plans

The subject of retirement plans tends to be so overwhelmingly ”secular” that little thought has gone into this subject. Is there even such a thing as a faith-based retirement plan? And if there is, what does it look like and how is it different from a secular retirement plan?

The basics of a retirement plan, secular or otherwise, are:

1. There is a Plan Document, a Summary Plan Description and an Investment Policy Statement in place.

2. There is a menu of investment options.

3. There is a registered Investment Advisor paired with an Investment Oversight Team selecting and reviewing the investment menu.

4. There is a Third Party Administrator assisting with legal and required plan activities, paired with a Plan Administrator working on behalf of the Employer and the Plan Participants.

5. There is a recordkeeping system in place that is paired with a system for buying, selling, and reporting on the investment purchases and sales.

6. There is a Registered Investment Advisor giving oversight to the buying and selling activities of any Registered Representatives involved in the plan.

7. There is an education and communication plan in place with a system for implementing the plan is well understood.

Now Let’s look at key tension points in the plan where Christian beliefs can make a difference:

Purpose

Let’s start with the purpose or mission of your retirement plan. For a secular plan, often the main priority may be to assist with tax savings and investment needs of the owner of the company. The IRS and Department of Labor requirements simply push the organization to include the regular workers, not just the executive team or company owners.

So, the purpose of the plan is to really benefit the folks at the top of the food chain, with the Participants only a grateful beneficiary of the legal mandates.

Investments

The retirement plan investment selection is guided by an Investment Policy Statement (IPS), which details the parameters for selecting the plan investments. Normally, the investment selection comes from a pool of funds, sometimes limited to a list from an insurance company separate accounts or one fund family. Then the IPS details the type of asset classes to be included, the performance requirements to be achieved in comparison to a class of like investments, or to an agreed upon market index and then to risk levels. The funds chosen come from the total universe with little or no thought to how the company stock or mutual fund is actually invested or how it compliments a Participant’s values.

Education

Retirement education is the badly needed but often overlooked element in any retirement plan. Secular education about saving and investing is needed, yet the motivation of “why” it should be a priority is missing. The reason why the plan exists and how it impacts the present and future, the Participant and the family is often not a priority. However, we know that ideas change the world. If we do not know why we are doing something, other than to satisfy our own craving for rest or relaxation or frenetic vacationing, the immediate motivation to save and invest is understandably minimized. The present is so important that preparation for the future will have to wait, or more likely, be ignored.

So, how does a Faith-Based Retirement Plan address these three tension points of purpose, education, and investment?

The Purpose of a Faith-Based Retirement Plan

The purpose of a Faith-Based Retirement Plan is to prepare Participants financially for a lifetime of ministry. It is to provide investment knowledge and stewardship tools to support that goal. It is to encourage active engagement with present and future stewardship issues. The purpose is to develop in your Participants a Future Funded Ministry mentality—ensuring a lifetime of service.

Faith-Based Investments as part of your Faith-Based Retirement Plan

The Investment Policy Statement and the investments themselves can promote and reflect a Christian Stewardship perspective. There are a growing number of successful mutual funds that screen for faith-based issues. Include a representative grouping in your investment menu and explain to your Participants why they are there. They are there to allow a Participant to match their investing activity with their personal values. While it is possible to build a menu limited to Christian values screening, being able to even talk about the possibility of this type of investing makes a significant statement about the organization and its leadership.

Faith-Based Education

What we teach and how we lead impacts all those associated with the plan. When we provide only a secular perspective, we end up with secular values. When we present a faith-based perspective, we end up with Faith-Based Values. With money being mentioned in more bible verses than any other subject, it seems clear that God knew and thinks it is important.

Faith Based education makes a difference. Understanding how a Future-Funded Ministry perspective changes your life, takes the whole idea of faith based education to a new and important level.

A Faith Based Retirement Plan takes the best elements of a secular plan and enhances it with Christian values and perspective. You start with a bigger purpose, you add investments that reflect your values, and you educate with God’s perspective. Your vendors support these positions based on their development and delivery of Faith-Based Retirement Planning tools, information and support.