I want to understand what compensation will be used when calculating my pension
The Clergy Pension Plan (the Plan) calculates your pension benefit using your Highest Average Compensation (HAC). This is defined as the seven highest-paid 12-month periods over your career during which Credited Service (CS) is earned.
- 12 consecutive months are used for one 12-month period, although months in which you earned $0 are excluded. The 12-month periods do not have to fall within a calendar year.
- The 12-month periods do not need to be consecutive. However, they cannot overlap.
- If you have less than seven years of compensated employment during which CS is earned, your HAC will be determined using a career average (i.e., all compensated months in which CS is earned will be counted).
For more details and transition rules, see Highest Average Compensation.
I have employer-provided housing and little or no cash salary
The Clergy Pension Plan is designed to provide a pension benefit to clergy who may earn non-cash compensation in the form of employer-provided housing. If you are eligible to participate in the Clergy Pension Plan and all or part of your compensation is housing, the value of your housing is the basis for all or part of your Total Assessable Compensation (TAC).
The value of employer-provided housing will be 30% of the sum of:
- Base salary (excluding housing) and scheduled taxable cash payments;
- Cash housing allowance and/or utilities;
- Employer contributions to a qualified or non-qualified plan; and
- One-time payments.
If the annual sum of the above is less than the Hypothetical Minimum Compensation (HMC) ($18,000 in 2018), then 30% of the HMC will be used.
Clergy whose only compensation is employer-provided housing will have a TAC equal to 30% of the HMC.
Certain key changes under the plan revisions include:
- Cash housing allowance will be assessable in all situations.
- The assessable value of housing will be the same whether you receive only employer-provided housing or both room and board.
- If you have multiple employers, assessments for employer-provided housing will no longer be allocated between employers but only to the employer providing housing
Your employer pays pension assessments based on your monthly TAC, which, in turn, impacts the CS that you earn toward the pension and life insurance benefits and the Medicare Supplement Health Plan subsidy. For a more detailed explanation, see I just landed my first job.
Download information on Total Assessable Compensation.
I am between cures or on an unpaid leave of absence
As you move through your career, you may have periods of time between cures or on an unpaid leave of absence. The Clergy Pension Plan allows you to earn CS and remain Active during breaks in service by paying assessments personally for up to 24 months. Payments must be paid on time each month in order to remain Active under the plan.
This personal assessment can be based on 1/12th of the Hypothetical Minimum Compensation (HMC), which is $1,500 per month in 2018, or 1/12th of your Highest Average Compensation (HAC). You choose whichever is best for you.
- If you pay assessments on 1/12th of the HMC or 1/12th of your HAC, provided it is above the HMC, you will earn one month of CS toward your pension and life insurance benefits as well as the Medicare Supplement Health Plan subsidy.
- If you pay assessments on 1/12th of your HAC and it is less than 1/12th of the HMC, you will earn one month of CS toward your pension and life insurance benefits. However, no CS will be earned toward the Medicare Supplement Health Plan subsidy.
You can pay personal payments for up to 24 months from the start of any break in service—such as when you are between cures, take unpaid leave from your employment (such as Family Medical Leave) or attend graduate school.
- For equal treatment of all breaks in service, the graduate study waiver will only be applicable to clerics with an approved application in place as of December 31, 2017.
See Fact Sheets for information on Credited Service, special situations, and the graduate study waiver.
The Plan provides for early retirement. The normal retirement age is 65. However, you may retire prior to age 65 pursuant to the following rules:
- If you have 30 or more years of CS, you may retire at age 55 with an unreduced pension benefit. In addition, you will receive a monthly bridge benefit, intended to assist with the cost of healthcare prior to becoming Medicare-eligible, which is $17.50 times your years of CS. The bridge benefit will continue only until you reach age 65.
- If you have five years of CS, you may retire at age 55. If your CS is under 30 years, your monthly pension payment will be reduced by 5% per year, or 0.4167% per month, for each month that your retirement date precedes age 65.
- However, if you are age 55 or older as of December 31, 2017, and have earned at least five years but less than 30 years of CS when you retire, you may:
- Retire on or after age 60 with a reduction of 0.2% for each month your retirement date precedes age 65; or
- Retire before age 60 (that is, between ages 55-59) with a reduction of 0.4167% for each month before age 65.
Download information on early retirement.
Upon the death of Active or vested participants who are not yet retired, the Clergy Pension Plan offers a preretirement survivor benefit to:
- Eligible named beneficiaries, who are limited to your spouse, eligible children, and disabled tax dependents.
- If no beneficiary is named, the default beneficiary is your spouse or, if you have no spouse, your eligible children.
- If named as your beneficiary, a domestic partner will be eligible for benefits during a transition period.
Benefits payable to a spouse, eligible child who is disabled, or disabled tax dependent will be paid monthly and continue for life. Benefits payable to eligible children who are not disabled will be paid monthly but will end when they reach age 25, regardless of their age at your death.
The preretirement survivor benefit is calculated as follows:
- If you are Active but not yet eligible for retirement at your death, the preretirement survivor benefit is equal to 50% of your calculated retirement benefit. The calculation uses your HAC and actual CS, plus projected CS until age 65.
- If you are Active and eligible for retirement at your death, the preretirement survivor benefit is the greater of:
- The calculation described immediately above; or
- 100% of your calculated retirement benefit using your HAC and actual CS, but subject to:
- If you are Inactive and vested at your death, the preretirement survivor benefit is equal to 50% of your calculated retirement benefit using your HAC and actual CS.
If you have more than one eligible beneficiary for your preretirement survivor benefit, the benefit is split among your beneficiaries. The benefit paid to eligible children will end when they reach 25, unless they are disabled, and their portion of the benefit will not be reallocated among any remaining beneficiaries.
Eligible beneficiaries will also receive a Christmas benefit and will receive a resettlement benefit if you were Active on your date of death.
Download information on the preretirement survivor benefits.
The child benefit is payable to eligible children (as defined below) if you are Active or vested when you die.
Eligible children are defined as:
- Your legal children who were living on the date that you stopped earning Credited Service or were born or adopted within 12 months thereafter; and
- Your stepchildren, foster children, or legal ward(s) who, in each case, were your tax dependent both in the year that you stopped earning Credited Service (or, if applicable, became your tax dependent within 12 months after your retirement date) and at the time of your death. In addition, an eligible child must be under the age of 25 at the time of your death or disability. (If disabled, the eligible child must have become disabled prior to attaining age 25.)
Eligible children receive a child benefit until they reach age 25. Eligible children who became disabled prior to age 25 will receive a child benefit for their life.
A child benefit is paid to each eligible child and includes:
- A flat dollar monthly benefit, which may be subject to reduction if the total child benefits payable to all eligible children in a calendar year is greater than your HAC.
- A Christmas benefit calculated at $25 x CS, including any projected CS, if applicable.
For information on the child benefit for children whose benefits commenced prior to January 1, 2018, see Child Benefit.