Providing a Secure Retirement to Y Employees
Since its founding in 1922, the YMCA Retirement Fund has helped to ensure a secure and comfortable retirement for Y employees in return for their commitment to a career fulfilling the organization’s mission.
During this period, the Fund has served a broad range of employees, from frontline and support staff that provide Y services and activities to senior managers and executive directors whose leadership and expertise strengthen and invigorate the Y Movement.
Providing Essential Employee Benefits
As a designated 501(c) (3) not-for-profit corporation, the Fund is organized and operated to provide employees at participating Ys a core of essential benefits, including:
A retirement annuity for participants and their beneficiaries
Opportunities for tax-deferred savings for retirement
Income for participants who are permanently and totally disabled
Death benefits for beneficiaries of active and retired participants
The Numbers Tell the Story
Today, nearly 815 Ys offer the Fund's plans, which have over 99,000 participants. Over 13,000 retired Y employees and beneficiaries currently receive an average annual benefit of $17,900.
Differentiating the Y from Other Non-Profit Employers
The Fund’s retirement benefits help to distinguish the Y from other nonprofit employers, particularly in attracting and retaining a dedicated workforce.
As John A. Clymer, former Fund Trustee and former member of the endowment committee of the YMCA of Greater St. Paul, notes, “The Retirement Fund provides employees a benefit that most employers don’t provide. It is an important competitive advantage when you’re recruiting employees to tell them about the Retirement Fund and the importance of building up a retirement nest egg that they might not otherwise have with another employer.”
According to our recent survey of Y CEOs, over 96% are satisfied with the Fund, with respondents citing its stability and reliability, overall performance, and Fund leadership as driving factors for their decision. Additionally, over 98% of Y CEOs are confident in the Fund's management of their retirement savings.
A Pioneer in Retirement Benefits
The Fund has consistently been in the forefront of retirement plan innovation.
Rising to the Challenges
The concept of a retirement fund for Y employees fi rst took root in 1909. At that time, Y officers saw that the staggering turnover rate among Y staff presented a significant threat to the success of the Movement. In response, Y leadership mandated the creation of a retirement fund to encourage employee retention and loyalty.
Meeting—and Surpassing— Fundraising Goals
After actuaries estimated that the Fund would initially need $3.7 million to provide retirement benefits to its current employees, a fundraising goal of $4 million was set. Y leaders John R. Mott and Alfred H. Whitford spearheaded the fundraising challenge. Thanks to the generosity of the Rockefeller family and other donors, and the dedication of Y employees who raised over $350,000 (more than triple their goal), the fundraising was an unqualified success.
Breaking New Ground in Retirement Security
The YMCA Retirement Fund was incorporated by a special act of the New York State legislature in 1921—more than a decade before Social Security was introduced and at a time when private pensions were extremely rare.
It’s not surprising, then, that many within the Y Movement consider the creation of the Retirement Fund to be one of the most important events in the Y’s history. This viewpoint was substantiated by a survey in which Y professionals and retirees were asked which event in the 150-year history of the Y they considered the most important. Their number one answer, as reported by Perspective magazine in 2005, was the establishment of an independent retirement fund.
From its inception, the Fund took steps to establish its credibility, stability, and independence. For example, the Fund requested that the New York State Insurance Department—a highly regarded independent auditor and professional actuary—examine its books and report publicly on the Fund. Today it is just one of the independent outside agencies that regularly review and report on the Fund’s operations.
The Board of Trustees also established rules to ensure the Fund’s financial and managerial independence from Y-USA, as well as from all participating community Ys. In addition, no retired participant is permitted to serve on the Board. Today, these rules remain in effect as important aspects of Fund governance.
Raymond P. Kaighn became the Fund’s first secretary in 1922 and its first president in 1929. Known as the founding father of the YMCA Retirement Fund, he saw the Fund through the dark days of the Depression while overseeing modifications to the Fund bylaws to permit participants to make additional personal payments to increase their annuity.
A New Era for Women
A pioneer in equal opportunity for women, the Fund admitted female participants in 1934 under Mr. Kaighn’s leadership. Today women make up nearly three-quarters of the Fund’s 99,000 participants, and women serve on both the Board of Trustees and the Fund’s management team.
Growing Assets, Increasing Benefits
In 1940, Earl W. Brandenburg, a former member of the Fund’s Board and a general secretary of the YMCA of St. Louis and St. Louis County, was chosen to head the Fund. At that time, Fund assets totaled $17 million. By 1961, when Mr. Brandenburg retired, those assets had climbed to $107 million.
A Fund without Peer
Forrest E. Wharry, who had worked at the Fund for ten years, took the reins in 1962. During his tenure, the Fund’s actuary undertook a comprehensive analysis of the organization, which showed that the benefits it provided surpassed those of the pension plans of most other not-for-profit organizations. Under Mr. Wharry’s leadership, the Fund also hired its first full-time investment director.
Harold C. Smith joined the full-time staff of the Fund in 1958 and succeeded Mr. Wharry in 1983. During his 17-year tenure leading the Fund, its assets swelled from over $500 million to $3.6 billion, and the number of participants grew from 18,891 to 76,449.
Resilience and Innovation
Upon Mr. Smith’s retirement in 2000, John M. Preis was named fifth president and CEO of the YMCA Retirement Fund. During Mr. Preis’ tenure, the Fund has weathered unprecedented financial storms, including two of the worst bear markets in U.S. history.
In addition to his leadership in these challenging conditions, Mr. Preis has overseen a comprehensive upgrade of the Fund’s technology, initiated the creation of a professional customer service staff , and led a successful effort to confirm the Fund’s church plan status.
Our Church Plan Status
In February 2002, the IRS challenged the Fund’s tax status and it became necessary to appeal directly to Congress for protection. After two years of very hard work by Y volunteers and staff nationwide, a bill specifically clarifying the Fund’s church plan status passed both the House and Senate by unanimous consent.
On December 21, 2004, President George W. Bush signed U.S. Public Law 108-476. The bill was one of only three tax bills signed into law in 2004, and its passage reflects Congress’s respect for the work of the Y and its confidence in the integrity of the YMCA Retirement Fund.
The Fund as a Responsible Fiduciary
As a fiduciary, the Fund has remained true to its governing principles: Security, Integrity, and Enduring Value
Keeping Its Focus on Participant and Retiree Interests
As a fiduciary, the YMCA Retirement Fund is legally responsible to make all investment, management, and benefits decisions in the best interests of the Fund, its participants, and beneficiaries.
Since its founding in 1922, the Fund leadership has consistently taken measures that demonstrate its role as a responsible fiduciary in building and protecting the Fund’s assets to the benefit of plan participants and retirees. These measures include establishing the independence of the Fund, having the Fund’s records reviewed by external agencies, increasing annuity benefits when Fund assets permitted, and adjusting annuity rates as needed to preserve and augment plan balances.
“We all have only one purpose in mind, and that is to make the best retirement benefits possible for our wonderful YMCA employees,” notes Elizabeth T. Frank, a former member of the Fund's Board and former board member of the YMCA of Philadelphia and Vicinity.
Performance in All Markets
The Fund has survived and prospered in all types of investment markets owing in large measure to the fiscal prudence and astute decision-making of its leadership, as well as the Fund’s long term investment philosophy.
For example, in its early days the Fund pursued a very conservative investment approach, targeting more stable and predictable returns from bonds and fixed-income securities. As a result, the Fund did not lose a single dollar during the market volatility of the Great Depression and by 1931, actually had a slight increase in participants.
And at times when the Fund’s investments exceeded actuarial requirements, Fund leadership initiated the practice of paying “experience dividends” to beneficiaries.
More recently, the Fund has weathered unprecedented financial storms, including significant bear markets, steep portfolio declines, and a loss of investor confidence. Despite these challenges, the Fund has maintained fidelity to its long-term philosophy and balanced portfolio. As a result, the Fund rode out the tempest, with anticipation of being stronger in the long run.
Praiseworthy Track Record
Thanks to exceptional Fund management, the participant account balances have never gone down, and the Fund’s monthly annuities to beneficiaries have never been interrupted. Equally important, participants have not suffered the massive losses to their retirement savings as have many people participating in 401(k) plans.
As PLANSPONSOR observed, “Thousands and thousands of YMCA staff work at the camps, childcare centers, and fitness facilities at 2,617 YMCAs, and few of them will leave a Lexus in the parking lot. That said, after their careers, they can look forward to a head-turning pension.”
Reacting Quickly to Crisis
The Fund’s speedy recovery after the terrorist attacks of September 11, 2001 is another testament to its management skills. Despite the close proximity of the Fund’s offices to the World Trade Center, the Fund’s staff was displaced for only five days.
And thanks to the professionalism and dedication of the Fund’s employees, all participant records were protected and beneficiaries received their October annuity checks. The Fund’s current capability to continue service from multiple remote locations is a direct outcome of that terrible day.
A Broader Vision of Responsibility
In addition, over the past few years, the Fund leadership has taken a broader view of its fiduciary role by reaching out to all Y employees, including those who are not yet plan participants, to convey the importance of saving for their future financial security. To underscore its commitment to this broader vision, the Fund incorporated the Savings for Life message in its revitalized visual identity and stepped up its efforts to spread the savings message to local Ys.
The Exemplary Pension Fund
The YMCA Retirement Fund is widely regarded as setting the standard for national nonprofit organizations.
“The Fund is the envy of other large national non-profits,” notes Irv Katz, CEO, National Human Services Assembly, “even when compared to similar organizations that have paid close attention to employee benefits—like Boy Scouts, Boys and Girls Clubs, etc.”
The Fund is governed by a committed and deeply engaged Board of Trustees. These sixteen talented men and women, all of whom have local Y experience as volunteers or employed officers, bring expertise in investment management, law, employee benefits, and related fields to help guide the Fund through financial and legal matters while staying true to the Fund’s philosophy.
“So many people think that they would like to have a self-directed retirement plan, like I do,” says Fund Trustee and former Chairman of the Metro Atlanta YMCA, William A. Holby. “But I wish I could put my money with the YMCA Retirement Fund. When I come to Board meetings and look around the room, and see the quality of the staff, the quality of the Board, and the people who are managing this money, it’s an extraordinary wealth of talent.”