Mary went straight from college to seminary, having found her calling early in life. She was ordained in her mid-twenties and began to look for her first cure.
Mary is hired on the 15th of the month as a curate a couple of months after her ordination. During her career she moves from the curacy to a small parish to larger parishes. Her monthly compensation during her career will always exceed the monthly Hypothetical Minimum Compensation ($1,500 per month in 2018).
Mary is married to Peter and has three children.
Mary plans to retire at 65.
Key events in Mary’s career related to her pension
What this means for Mary
Mary will be eligible to participate in the Clergy Pension Plan once she is “regularly employed” and compensated by an Episcopal employer for five or more consecutive months.
- If Mary's work for an Episcopal employer is expected to last less than five months, participation in the Clergy Pension Plan is permitted if there is a letter of agreement directing the payment of assessments.
- Assessment calculations and the accrual of CS will be effective on the 1st day of the month coincident with Mary’s enrollment in the Clergy Pension Plan or the following month when enrolled on any other day of the month. In Mary’s case, since she was hired on the 15th of the month, she will begin earning CS on the 1st of the following month.
- When Mary has earned five years (or 60 months) of CS, she will be vested in the Clergy Pension Plan.
See Total Assessable Compensation for details on how TAC is calculated.
Peter, Mary’s spouse, and her children are eligible for certain survivor benefits.
- Mary is eligible for a life insurance benefit equal to six times her TAC, up to $150,000, while she is Active.
- Preretirement survivor benefits are available to Peter and, if named as beneficiaries, her eligible children, while Mary is Active or when she becomes vested. The amount of the preretirement survivor benefit depends on whether Mary dies before or after she is eligible to retire and whether she is Active on her date of death. The preretirement survivor benefit will be split equally among the named beneficiaries. In addition, the beneficiaries will be eligible for a Christmas benefit and, if Active on her date of death, a resettlement benefit. If Mary names her eligible children as beneficiaries, the preretirement survivor benefits payable to Mary’s children will cease once they reach age 25, unless they are disabled.
- Mary’s eligible children may also receive a monthly child benefit and a Christmas benefit until they reach age 25. If any of Mary’s eligible children are permanently disabled before age 25, he or she will receive a monthly child benefit for life.
Mary will receive short term disability and long term disability coverage while she is Active.
When Mary retires at age 65, she will have earned 38 years of CS. Her pension benefit will be calculated using a formula that considers her CS and Highest Average Compensation (HAC).
- HAC is determined using the seven highest-paid 12-month periods over Mary’s career. The 12-month periods do not need to be consecutive, but cannot overlap. See Highest Average Compensation for details.
- The formula to calculate the annual retirement benefit for Mary is:
Step 1: HAC x 1.6% x CS
Step 2: First $10,000 of HAC x 1.15% x CS
Total Basic Annual Benefit = Step 1 + Step 2
If Mary’s HAC is $75,000, her annual pension benefit will be calculated as follows:
Step 1: $75,000 x 1.6% x 38 = $45,600
Step 2: First $10,000 of HAC x 1.15% x 38 = $4,370
Total Basic Annual Benefit = $45,600 + $4,370 = $49,970
- Mary's Christmas benefit, which is paid in December, will equal $950 ($25 x 38).
- Because Mary was Active under the Clergy Pension Plan when she retired, benefits available at and during her retirement include the resettlement benefit, a life insurance benefit , and access to Medicare Supplement Health Plans with the full subsidy because she has earned at least 20 years of CS.
- Since Mary retired as an Active participant, she is eligible for a life insurance benefit equal to six times her HAC, up to $50,000.
- At retirement, Mary and Peter will select a survivor benefit option for Peter. The default option for an eligible spouse is a subsidized 50% joint and survivor option, but Mary and Peter can select an optional form of payment. The options include a survivor benefit equal to 0%, 75%, or 100% of Mary’s monthly benefit, as well as a 15-year certain and life benefit. The benefit is actuarially adjusted if an optional form of benefit is elected.
- Once the survivor benefit option is chosen, it is irrevocable.
- If Mary predeceases Peter, he will receive a Christmas benefit in addition to the monthly survivor benefit.
- If any of Mary’s eligible children are under age 25 when she dies, they are eligible for a child benefit and Christmas benefit until they reach age 25. If any of Mary’s eligible children became permanently disabled before age 25, they will receive a monthly child benefit for life.
- As an eligible spouse at retirement, Peter will also receive a subsidy towards the cost of a Medicare Supplement Health Plan once he becomes eligible for Medicare. He will continue to be eligible for this subsidy even if Mary and he divorce after retirement or if Mary predeceases him.