Pam, who was ordained in her late 30s, has been a rector in her parish for over five years. She loves her job, but wants to spend more time with her young children. Pam and her husband, Connor, agree that she will work part-time until the children are older.
Pam is able to find a part-time priest-in-charge position that allows her to reduce her hours. When her children are older, she returns to full-time work in the Church.
Pam and her husband divorce before she retires and enter into a Qualified Domestic Relations Order (QDRO) that splits her retirement benefits with Connor.
Pam retires at age 67.
Key events during Pam’s career related to her pension
What this means for Pam
Pam will be eligible to participate in the Clergy Pension Plan (the Plan) once she is “regularly employed” and compensated by an Episcopal organization for five or more consecutive months.
Regardless of whether Pam is employed full-time or part-time, she will earn full Credited Service (CS) toward pension and life insurance benefits as long as her parish pays the full assessment due on her Total Assessable Compensation (TAC) each month.
- If, when Pam reduced her hours, her TAC was decreased to below the Hypothetical Minimum Compensation (expected to be $1,500 per month in 2018), then she will earn CS toward her pension and life insurance benefits, but not for the Medicare Supplement Health Plan subsidy. Pam has the option to pay personal assessments on the difference between 1/12th of the Hypothetical Minimum Compensation (HMC) and her monthly TAC to earn CS for the Medicare Supplement Health Plan subsidy. For more on paying make-up assessments, see Andrew's story.
- The determination of Pam’s Highest Average Compensation (HAC) will use the seven highest-paid 12-month periods of her career, which are not required to be consecutive. As such, the lower TAC that she earned while employed as a part-time priest-in-charge should not negatively impact the amount of her pension benefit, although it may impact the amount of her pre-retirement (but not post-retirement) life insurance coverage as well as her eligibility for the Medicare Supplement Health Plan subsidy.
When Pam and Connor divorce, the court determines that Pam’s pension is marital property that is required to be divided. In order to assign a portion of Pam’s pension to Connor, they enter into a QDRO, which is approved by The Church Pension Fund (CPF).
- Since Pam and Connor divorce before she retires, they have the choice to enter into a separate interest QDRO or a stream of payment QDRO if they want CPF to pay a portion of Pam’s pension directly to Connor. They should consult their own legal advisors as to which type of QDRO is best for them and how Pam’s pension should be divided.
- If Pam and Connor had divorced after Pam retired, a stream of payment QDRO would be their only available option if they want CPF to pay a portion of Pam’s pension directly to Connor.
- HAC is determined using the seven highest-paid 12-month periods over Pam’s career. This can include some 12-month periods prior to working part-time and the remainder after she returned to full-time work. See Highest Average Compensation for details.
- Pam’s retirement benefit is calculated using the normal retirement formula. See Mary’s story for details on calculating the retirement benefit.
- Pam’s benefit will be reduced by the amount assigned to Connor pursuant to the QDRO.
- Because Pam earned more than 25 years of CS, she is considered to be an Active participant as of her retirement even if she does not retire directly from active ministry. Benefits available at and during retirement include the Christmas benefit, resettlement benefit, life insurance benefit, and access to the Medicare Supplement Health Plans. If Pam earned ten or more years of CS toward the Medicare Supplement Health Plan subsidy, she will also receive the subsidy.