||What is the basis of granting benefits? (Z 35)
||The main factors that determine benefits amounts are the number of
years of service credit, level of earnings, and marital status.
||Where can a denominational employee get information regarding the
monthly benefit rates which are currently in effect?
||From the administrative or human resources office of his/her latest
||On what date do retirement benefits begin? (Z 35 05)
||Retirement benefits may begin on the first day of the month in which
the vested participant becomes age eligible, if full-time
denominational employment has been discontinued. As a general rule, no
benefit shall be effective more than 12 months prior to the month in
which the application is approved by the Retirement Plans Committee.
||Are all participants of the Retirement Plan granted the same
benefits? (Z 35 05)
||No. The benefits differ depending on years of service credit earned,
the level of earnings during the years of service, and whether the
participant is eligible for a spouse allowance.
||How are monthly benefits calculated? (Z 35 05)
||The following formula is used to calculate benefits: Years of
Service Credit x Benefit Rate Factor x Pension Factor = Single Life
Benefit. The average of the 10 years during which the employee's
Yearly Rate Factors were the highest will yield a Benefit Rate Factor
of between .80% and 1.60%. This factor multiplied by the years of
service credit (maximum of 40) determines the percentage of the current
denominational pension factor that will be paid for a Single Life
Annuity. Yearly Rate Factors from the Yearly Rate Factor Table are
recorded on the service record.
Example: Juan Escobar has been a pastor for the Adventist Church.
His ten highest years of pay were at 150% of the remuneration factor,
yielding a Benefit Rate Factor of 1.30%. In his year of retirement, the
Pension Factor was $2,225. The example gives benefits for a range of
years of service credit under this Plan.
|Years of Service
|| Years x Benefit Rate Factor x Pension Factor =
Single Life Annuity, or Years x .013 x $2225 = SLA. Requires 10
years to vest. This is the benefit provided to a single retiree
or a married retiree who waives the Joint & Survivor
|| Years x SLA x .0125. Requires a minimum of 20
years for eligibility. Also requires marriage to spouse for at
least one year prior to retirement. Any employer-provided
retirement benefits (other than SS) are subtracted from the
Spouse Allowance. May be proportionalized for employees
retiring after plan freeze in 1999
|SLA + SA
|| Single Life plus Spouse Allowance. This is the
monthly benefit provided for an employee who waives the Joint
& Survivor benefit, providing no survivor, healthcare or
death benefits to his/her spouse, and is eligible for a Spouse
|J&S + SA
|| Single Life x 90% plus Spouse Allowance. (Assumes
spouse is within five years of age of retiree.) This is the
monthly benefit provided for an employee who accepts the Joint
& Survivor benefit and is eligible for Spouse
||Are the benefits taxable?
||Monthly retirement benefits that are received from the Retirement
Plan are taxable income. However, retirement benefits are not subject
to Social Security tax. The one-time Retirement Allowance granted by
this Plan is also subject to income tax but not Social Security tax.
Retirement benefits paid directly by the employer to the employee are
||Are retired ministers eligible for housing allowance exclusion or
parsonage allowance exclusion for income tax purposes?
||Yes. Monthly church provided pension income for retired ministers is
considered as eligible for housing allowance exclusion. Annual
instructions are sent to retired ministers assisting them in supporting
this tax status.
||Is the spouse of an employee eligible for retirement benefits? (Z
20 25, 30, 35)
||There are several ways whereby a non-employee spouse may receive
benefits from the Retirement Plan, usually upon the death of the
Joint and Survivor Annuity:
When a Joint & Survivor retiree passes away, the spouse will be
eligible to receive on-half of the Joint and Survivor Annuity as a
survivor benefit, if that spouse was married to the employee for at
least one year prior to his/her retirement. If the retiree's spouse
dies first, the J&S benefits remain the same.
||Yearly Rate Factors
||Yearly Rate Factors
Upon the death of a retiree, the spouse is eligible to receive a
proportionate share of any spouse allowance being received by the
participant based upon the number of the participant's years of service
during which they were married, provided they were married during at
least 10 years of the participant's service and the spouse is not
receiving his/her own employer-funded pension.
Early Survivor Benefits:
If an active employee dies at a time when he/she could have retired and
begun to receive early retirement benefits, and is survived by a spouse
to whom he/she had been married for at least one year immediately
preceding his/her death, the spouse is eligible for a surviving spouse
early survivor benefit. This benefit equals the monthly amount which
he/she would have received if the employee had been receiving a Joint
& Survivor retirement benefit at the time of death, as well as any
Spouse Allowance for which he/she might have qualified.
Survivor Spouse Benefit:
If an active employee dies prior to eligibility for any retirement
benefits, the spouse will be eligible to receive survivor benefits
calculated at the Joint and Survivor Annuity and any Spouse Allowance
applicable when he/she reaches his/her normal retirement age, provided
(a) the spouse had shared at least 15 years of his/her service credit,
or (b) the spouse had at least 10 years of shared service credit and is
able to qualify for a retirement benefit of his/her own service, or (c)
the spouse had shared at least 10 years of service credit and was over
55 years of age at the time the employee died while in denominational
Early Reduced Survivor Benefits:
Spouses who are less than normal retirement age, but who otherwise
qualify and are at least 55 years of age at the time of the employee's
or participant's death, but who have not been employed on a regular
basis and do not have suitable employment skills, may be granted early
reduced survivor benefits. The reduction shall be 1% of the benefits
for the rest of their lives for each full year that their age is below
60. This reduction shall apply to both the Joint and Survivor Benefit
and the Spouse Allowance.
Special rules govern situations where a surviving spouse was married to
more than one employee and has been earning his/her own service
Surviving Spouse Temporary Benefit:
If a full-time employee is survived by a spouse to whom he/she has been
married for the past full year, that spouse, if employed less than 20
hours a week, will be eligible to receive temporary benefits if he/she
either has a dependent child less than 8 years of age and not yet in
elementary school, or is engaged for a period of not more than 24
months in acquiring skills to enable such a spouse to find
||Does this mean that surviving spouses are eligible to receive
temporary benefits if they have small children? (Z 20 35)
||Yes, but only if the spouse is employed less than 20 hours per week
and only if the dependent child is less than 8 years of age, has not
yet begun elementary school and if the spouse remains unmarried. Upon
failing to fulfill any of these requirements, temporary benefits
||Is it true that any surviving spouse who has reached the age of 55
is eligible for retirement benefits? (Z 20 30)
||No. Only if the spouse has been married to the employee for the full
year prior to the employee's death and (a) if, at the time of his/her
death, the employee was eligible for early retirement, or (b) the
spouse is unemployed and does not have suitable employment skills and
the requirements for shared service are met, or (c) the spouse is
unemployed and has small children. (See previous question.)
||Are Survivor Benefits terminated if the surviving spouse
remarries? (Z 20 35 Z 20 60 Z 20 65)
||No. Survivor Benefits, with the exception of the temporary benefits
such as dependent child, tuition assistance and healthcare coverage,
will continue even though the surviving spouse remarries.
||Are employees or retirees eligible for assistance on moving
expenses to their retirement home? (X 23 10)
||The Retirement Plan does not provide assistance on this expense. In
some cases the employing organization does not provide assistance. Your
human resources office should be able to provide information on policy
||What is the Single Life Annuity and how does an employee apply for
it? (Z 20 40)
||The Single Life Annuity provides retirement benefits to the
participant only. At least 30 days prior to retirement benefit starting
date an employee may file a written election with the committee to have
his/her retirement benefits paid in the form of a Single Life Annuity.
The spouse, who must countersign the election form, will receive no
survivor benefits, health care expense assistance or other benefits on
the basis of the employee's service credit. Without such an election,
benefits to a married retiree are processed at the Joint & Survivor
||What happens to a Single Life Annuity at the death of the
||The monthly benefit ceases immediately. No benefits are transferred
to another family member.
||What is Joint and Survivor Annuity? (Z 20 15)
||A Joint and Survivor Annuity is automatically provided to
participants who have been married to their spouses for at least one
year prior to admission to the Plan, unless there is a special election
made for a Single Life Annuity. The Joint & Survivor benefit is
usually 10% less than the Single Life Annuity, depending on the age
difference of retiree and spouse. That reduction in benefits pays for
healthcare, death benefits and survivor benefits (if eligible) to be
applied to the spouse, if the participant passes away before the spouse
||What happens to the J&S Annuity if the participant passes away
before the spouse does?
||The monthly J&S Annuity is cut in half and becomes a survivor
benefit to the eligible spouse.
||What happens to the J&S Annuity if the eligible spouse passes
away before the participant?
||The J&S Annuity continues unchanged.
||What happens if the eligible spouse passes away, and the
participant re-marries, and then the participant passes away? Does the
new spouse receive survivor benefits?
||No. Only the spouse who was married to the retiree for one full year
prior to retirement is an eligible spouse. Re-marriage does not impute
survivor benefits to a new spouse.
||What is the Spouse Allowance? (Z 20 20)
||The Spouse Allowance is a conditional benefits enhancement designed
to give special assistance only to a participant whose spouse has no
personal plan. In order to be eligible for a Spouse Allowance, the
The Spouse Allowance, as calculated, will be reduced by any
employer-provided retirement benefits to the spouse. The Spouse
Allowance is NOT the same as the Joint & Survivor benefit. It
cannot be purchased.
- Have at least 20 years service credit.
- Be married to a spouse to whom he/she has been married for the
past full year.
||How is the Spouse Allowance calculated? (Z 20 20)
||The Spouse Allowance is calculated using the following initial
1.25% x Years of Service Credit x
Single Life Benefit = Unadjusted Spouse Allowance
The following adjustments will be applied to the Unadjusted Spouse
- The spouse allowance is reduced by any employer provided
retirement benefits received by the spouse from his/her own
employment other than Social Security benefits. A lump sum
distribution shall be computed on the basis of a monthly annuity
payable for life.
- The spouse allowance is reduced by 1% for each full year above 5
that the participant's age exceeds the spouse's age.
- For employees eligible to retire after 12/31/1999 with service
under the defined contribution plan, the allowance is
proportionalized by calculating a theoretical full-career allowance
and multiplying it by a fraction including total years of service
credit as the denominator and pre-2000 service credit as the
||What happens to the Spouse Allowance upon the death of the
||The Spouse Allowance is recalculated upon the death of the
participant to reflect the proportion of the years of shared service
compared with total years of participant service credit.
Example: Joe and Jean Green were married for 30 of his 40 years of
service credit. Jean had no benefits of her own. When they retired, Joe
received a full, unreduced Spouse Allowance based on the years of
Service Credit. Joe passed away before Jean did. Upon Joe's death, the
Spouse Allowance was recalculated and multiplied by 30/40 to reflect
that they had shared 30 of his 40 years of service credit.
||What if an employee retires, and his/her spouse is still employed,
and not receiving retirement benefits of his/her own. Is the
participant eligible for Spouse Allowance?
||Yes! But only until his/her spouse retires and becomes eligible for
his/her own benefits. At that time the participant's unadjusted Spouse
Allowance will be reduced or discontinued, depending on the amount of
the spouse's benefits.
Example: Charlene retires after 40 years of working for the
denomination. Her husband, Charles works for the state educational
system and decides to continue work for another year. Since Charles is
not receiving retirement benefits, Charlene is temporarily eligible for
full Spouse Allowance. In another year, Charles retires, and his
pension exceeds the total amount of Charlene's Spouse Allowance. The
spouse Allowance is discontinued.
||Is a retiree eligible to continue to receive the Spouse Allowance
if his/her spouse dies? (Z 20 20)
||No. The Spouse Allowance is continued for the month of death and two
months following. It is then discontinued.
||Can a Spouse Allowance be reinstated if the participant remarries?
(Z 20 20)
||No. The Spouse Allowance is only provided to a participant who has
been married to his/her spouse for at least one full year before being
admitted to the Retirement Plan.
||What is the 'Family Plan?'
||For participants whose benefits began before January 1, 1981, there
was no Spouse Allowance. Instead there was a "Family Plan." Provision
for the spouse of a participant was included in Family Plan benefits,
but was not called 'Spouse Allowance.' While there are similarities in
eligibility and benefits calculations, some special rules apply.
||Are extra benefits available for children? (X 45 15) (X 45
||Through December 31, 1997, a parallel plan provided tuition
assistance for the dependent children of retirees. Only employees who
retired or were eligible to retire prior to January 1, 1998 continue to
be eligible to receive this benefit for their dependent children.
The following eligibility criteria apply:
The amount of the grant is 35% of tuition and other regular fees for
day students and 70% for dormitory students based on 35 years of
service credit. This grant is proportionately reduced for retirees with
less than 35 years of service credit.
- Retiree went directly from employment into retirement or died in
- Retiree was eligible for tuition assistance from last
- Dependent child must be in a denominational educational
||Does a retiring employee receive a lump sum payment in addition to
retirement benefits? (Z 40 10 & X 45 12)
||Yes. Employees who qualify for regular retirement benefits and who
have earned the equivalent of at least half time service credit in each
of the two years immediately preceding retirement will receive a
Retirement Allowance from the Plan. For 40 years of service credit the
allowance is equal to 5 months of basic remuneration. The allowance is
proportionately reduced for service credit less than 40 years. The plan
is required by the IRS to withhold 20% withholding taxes from payments
made directly to the retiree. Up to 100% of the retirement allowance
can be rolled over to an IRA or other tax sheltered annuity with no tax
withholding. The requirement that employees go directly from active
service into retirement in order to be eligible for a retirement
allowance payable at the time regular retirement benefits begin may be
waived if the following applies:
- Termination of active employment was no more than 36 months prior
to being eligible to receive retirement benefits, and
- Termination of active employment was at the written
recommendation of the last employer, and approved by the Retirement
Plan Committee, or
- The termination of active employment was due to the transfer of
the spouse to a different location or because of retirement of the
- The Retirement Plan Committee, because of exceptional
circumstance, approves a request of the employing organization to
waive the requirement that an employee go directly from active
service into retirement.
The Retirement Allowance based on service after December 31, 1999 is
paid by the employer directly to the employee and is not eligible for
Example: Joe Smith works for the church for 40 years and retires
on December 31, 2007. He thus has 8 years after December 31, 1999 and
32 years prior. Joe is eligible to receive five months of basic
remuneration upon retirement. 32/40 of that benefit will be paid by
the Retirement Plan, and 8/40 by the employer.
||If a participant is divorced from his/her spouse is there any
provision for an allocation of benefits? (Z 35 07)
||Often a divorce settlement will result in the issuance by the court
of a Qualified Domestic Relations Order (QDRO). The Plan will follow
the instructions of the court in reference to division of benefits. In
cases where the courts have not made a determination of the ex-spouse's
rights to retirement benefits, the Retirement Plan Committee is
empowered to allocate the benefits between the two parties in harmony
with approved guidelines.
||Does the Retirement Plan provide a Death Benefit? (X 45
||Yes. Upon the death of a participant who has at least 10 years of
service credit in the Church Plan, (and a participant's spouse who was
eligible for joint and survivor benefit) a death benefit is paid from a
parallel plan to the surviving spouse, or if there is no surviving
spouse, to the executor of the estate, or to the person who has
undertaken responsibility for the funeral arrangements. The amount of
the death benefit for a participant with 40 or more years of service
credit is the full pension factor in effect. For those with less than
40 years the allowance is the pension factor multiplied by years of
service credit divided by 40.
Example: Christopher and Christine Martin are both retired.
Christine was a school teacher for 32 years. Christopher was not a
denominational employee. When Christine retired, she chose the Joint
& Survivor benefit. Upon Christopher's death, Christine receives a
death benefit. The calculation formula is Service Credit/40 x Pension
Factor or 32/40 x $2,225 = $1,780 based on the factor in the year 2008.
A few months later, Christine also dies. Her estate, or the person who
cares for her funeral expenses will also receive a death benefit, using
the same calculation and the Pension Factor in effect at the time of
||What if a child is caring for the funeral expenses instead of the
spouse. Can the benefit be given to the child?
||No. If there is a spouse, the Plan must grant the benefit to that
||Does the employee Accidental Death & Dismemberment policy, or
life insurance policy continue upon my retirement?
||Only if you converted those policies yourself upon retirement. These
benefits are not provided by the Plan. If you do not arrange for a
continuance yourself, these policies will lapse.
||Are the benefit rates ever adjusted to compensate for cost of
||Yes. Historically benefits have been adjusted annually to compensate
for inflation. Notice of such a cost of living adjustment is given in
the Reflections newsletter.