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Board Approves Changes in Estate Patronage Refund Policy

Historically, Southwest Iowa REC has paid deferred patronage dividends to the estate of a deceased member at 100% face value when applied for.  These refunds have been paid out of the normal rotation cycle.  Other members have had to wait for a general patronage retirement to be approved by the Board of Directors to get their refund.  The normal general patronage retirement cycle is around 20 years but we have been on a 16 year cycle in recent history.  Best practice for our industry is, if an electric cooperative chooses to make special retirements, such as retirements to estates, the amount of the retirement should be discounted to reflect the time value of money. 

The Southwest Iowa REC Board of Directors has reviewed its current policy and approved a change.  Effective January 1, 2017, the following options will be available for payment of deferred patronage dividends to the estate of a deceased member:

1. Apply for all deferred patronage dividends allocated to the deceased member.  This refund will be paid currently in one lump sum according to present value calculations using a discount rate approved by the Board of Directors.  The discount rate currently in effect is 5%.  

2. The deferred patronage dividends of the deceased member may remain on the books of the cooperative, either in the name of the estate or assigned to an heir, and paid out when approved by the Board of Directors as part of a general patronage refund at 100% value.  This general patronage retirement refund cycle is usually no greater than 20 years.

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