February 4, 1998
Al Beltran, Chief Executive Officer
Hidalgo Federal Credit Union
P.O. Box 4829
McAllen, TX 78501
Re: Annuity Plan for Volunteer Board Members, Your letter dated
December 12, 1997.
Dear Mr. Beltran:
You asked if a federal credit union (FCU) can institute an annuity
plan for its volunteer board members. No, it cannot.
The Federal Credit Union Act (the Act) only permits one director,
as elected by the board, to be compensated as a board officer.
12 U.S.C. §1761a. All other board and committee members
must serve without compensation. 12 U.S.C. §1761(c). The
Act expressly limits the benefits that may be provided to volunteer
board and committee members to health, accident or similar insurance
and the reimbursement of reasonable expenses. Id.
NCUA's regulations interpreting these provisions in the Act provide
that "reasonable health, accident and related types of personal
insurance" will not be considered compensation. 12 C.F.R.
§701.33(b)(2)(ii). The regulations identify life insurance
as impermissible compensation and further state that any insurance
protection provided "must cease immediately upon the insured
person's leaving office, without providing residual benefits other
than from pending claims." Id. An annuity is not
a type of personal insurance as permitted in the Act but is more
akin to a retirement plan or benefit. Our regulation providing
that an FCU may provide retirement benefits contemplates such
benefits only for employees and compensated officers. 12 C.F.R.
§701.19(a).
Sincerely,
Sheila A. Albin
Associate General Counsel
GC/MSC:bhs
SSIC 3601
97-1257
cc: Region V