When you retire, your basic annual pension benefit on retirement is based on your length of credited service (CS) and highest average compensation (HAC) on retirement.
Credited Service (CS) is the period of years and months for which full assessments have been paid on full-time compensation.
Highest average compensation (HAC) is the average of the highest-paid seven out of eight consecutive 12-month periods in your ministry.
Normal Retirement
Estimate your basic annual pension (new formula as of July 1, 2006):
| 2.75 x CS x HAC up to $10,0001 | |
| + | 1.6% x CS x HAC over $10,000 |
| ------------------------- | |
| = | Basic Annual Pension |
1Or your highest average compensation, if it is below $10,000.
Early Retirement
- You may retire as early as age 60 if you have at least five years of credited service. Since you can expect to receive payments for longer than if you had retired at 65, the pension is reduced in proportion.
- If your credited service is less than 30 years, your benefit is calculated by the same formula as for a normal retirement, then reduced by 2/10 of one percent for each month the early retirement date is short of normal retirement.
- If your credited service is 30 years or more, your pension is not reduced.
Sample calculation:
When The Rev. J. Fisher retires at age 62 (36 months short of normal retirement) with 25 years of credited service, the pension is reduced by .2% times 36, or 7.2%.
With 25 years of credited service and a highest average compensation of $55,000 the annual pension is calculated in two steps:
- Step 1
- The formula for normal retirement is used:
| $55,000x 25 x .015 = $20,625 | |
| + | $10,000 x 25 x .0025 = $625 |
| ----------------------- | |
| = | Basic annual pension = $21,250 |
- Step 2
- The basic annual pension is then reduced by .2% for each month short of retirement, in this case 36 months or 7.2%:
Basic annual pension = $21,250
Reduction (7.2 % of $20,625) = $1,530
Early retirement pension = $19,720.
30-Year Early Retirement
- Once you have earned 30 years of credited service, you may retire as early as age 55. The benefit is based on actual years of credited service and is not reduced for early retirement.
- Before age 62, if you take 30-year early retirement, you receive a monthly "bridge benefit" of $15 for each year of credited service.
- Between ages 62 and 65, this supplement is $7.50 per year of credited service and ends completely when you reach 65.
Retirement at age 72
You are required by Canon law to retire at age 72 and resign your present position. Any further church work you perform must have a bishop's approval. It is not assessed and cannot be used to earn additional credited service.