Introduction

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Introduction

From the Summary Document of the Single Defined Benefit Plan

The Church of the Nazarene Single Defined Benefit Plan was created by the merger of the General Church Pension Plan with the Basic Pension Plan, effective January 1, 1996.

The benefits of those who participated in the Basic Pension Plan and in the General Church Pension Plan which have accrued up to December 31, 1995, will be paid from the Single Defined Benefit Plan. Participants in either or both Plans as of December 31, 1995, may continue to accrue additional benefits under the Single Defined Benefit Plan after December 31, 1995, as explained below.

Each participant in the General Church Pension Plan and the "Basic" Pension Plan became a participant in the Single Defined Benefit Plan as of January 1, 1996. There are no new participants in the General Church Pension Plan, the Basic Pension Plan, or the Single Defined Benefit Plan after December 31, 1995.

Unless and until each participant's accrued benefit under the General Church Pension Plan or the Basic Pension Plan is 100% vested, the Board of Pensions and Benefits USA will keep separate records to properly reflect the different percentages of vesting each participant may have after the Plan merger.

The illustrations and examples used in this Summary do not demonstrate all possible scenarios. If your situation is not reflected in the illustrations or examples, and you have further questions, please contact the Pensions office.

What about benefits for participants in the Basic Pension Plan?

Effective January 1, 1996, the Church established the Church of the Nazarene 403(b) Retirement Savings Plan (formerly known as the Nazarene Single Defined Contribution Pension Plan--A TSA Plan). This plan will be referred to in this Summary as the "403(b) Plan." A separate booklet describes the terms and provisions of the 403(b) Plan. However, the 403(b) Plan works together with the Single Defined Benefit Plan in the calculation of benefits for a participant in the Basic Pension Plan.

Under the Single Defined Benefit Plan, a person who was a participant (or beneficiary) in the Basic Pension Plan will receive the highest pension calculated under two separate formulas.

The first formula uses the pension provided by the amount in the participant's account under the 403(b) Plan derived from contributions from the Pensions and Benefits Fund of the Church of the Nazarene on or after January 1, 1996, plus earnings.

The second formula uses a pension derived from the formula (described in more detail below) under the Basic Pension Plan as of July 1, 2001, including service credits after December 31, 1995, and any increases in the pension benefit on or after July 1, 2001.

You will receive a pension benefit under the Single Defined Benefit Plan which equals the highest pension calculated under these two formulas.

Starting January 1, 1996, you have an amount credited to your account under the 403(b) Plan as determined by the Board of Pensions and Benefits USA. These contributions are called Annual Pension Supplement (APS) Contributions. This means that the Church will be providing benefits for you under both the Single Defined Benefit Plan and the 403(b) Plan. For this reason, the benefits that will be provided by the Church for you from the APS funding of the 403(b) Plan by the Pensions and Benefits Fund will offset the pension provided for you under the Single Defined Benefit Plan. In other words, your pension is based on the highest pension under the two formulas described above and then is offset by the pension which could be provided from the portion of the 403(b) Plan attributable to APS contributions by the Church from the Pensions and Benefits Fund. All of these calculations are done on an actuarial basis.

Here's an illustration of how these formulas work:

Formula #1 Cash value of your Nazarene 403(b) "offset" account derived from Pensions and Benefits Fund contributions: $3,013.78
 
  403(b) "offset" account monthly benefit value: $19.97
 
Formula #2 40 years of credited service at Basic Pension Plan standard formula, at age 65: $506.00

Since Formula #2 in this example produces the highest pension amount, the monthly pension amount paid from the Single Defined Benefit Plan (SDBP) would be determined as follows:

Grandfathered Basic Pension Plan monthly benefit value: $506.00
 
MINUS:
 
403(b) "offset" account monthly benefit value: - $19.97
 
Total monthly benefit from SDBP: $486.03

Therefore, you get $486.03 from the SDBP plus the value of your 403(b) "offset" account for a total of your grandfathered benefit value.

What about benefits for participants in the General Church Pension Plan?

If you were a participant in the General Church Pension Plan, you (or your beneficiary) are eligible for a pension under the Single Defined Benefit Plan equal to the pension that you would have received had the General Church Plan continued. But eligibility for this pension is contingent upon your making the required employee contribution equal to 3% of your pay after December 31, 1995. Whether you elected to continue to make required contributions under the Single Defined Benefit Plan after December 31, 1995, or not, the pension which you had accrued up to December 31, 1995, is unaffected.

If you continued the required contributions under the Single Defined Benefit Plan after December 31, 1995, you have continued to accrue additional pension credits. However, the Church has set up an account in your name under the 403(b) Plan and will contribute to that account an amount equal to a percentage of the average cash salary paid to Nazarene pastors in the U.S. (called APS) as reported for the prior Church year. This amount which the Church contributes to the 403(b) Plan on your behalf, plus earnings, will offset the pension which you receive attributable to your participation after December 31, 1995. All the calculations of your pension and of the offset to that pension from the 403(b) account are done on an actuarial basis.

Here's an illustration of how this works:

Grandfathered General Church Pension Plan monthly benefit amount at age 65: $500.00
 
MINUS:
 
403(b) "offset" account monthly benefit value: - $19.97
 
Total monthly benefit from SDBP: $480.03

Therefore, you get $480.03 from the SDBP plus the value of your 403(b) "offset" account for a total of your grandfathered benefit value.

What about other provisions of the Basic Pension Plan and the General Church Pension Plan?

The Single Defined Benefit Plan resulted from the merger of the General Church Pension Plan with the Basic Pension Plan on January 1, 1996. The formulas described above show how pension benefits are calculated after December 31, 1995. Other benefit provisions of both Plans as of December 31, 1995, continue in effect under the Single Defined Benefit Plan. For this reason, detailed descriptions of both of the Plans are included in this Summary.

What if you're a participant in the General Church Pension Plan and don't make required contributions after December 31, 1995?

You have the right to elect not to make contributions to the General Church Pension Plan after December 31, 1995. However, if you choose not to contribute, you will not accrue any additional pension credits under the Single Defined Benefit Plan. Essentially your pension will be frozen as of the date you cease making required contributions.

Suppose that you decided to make required contributions after December 31, 1995, and stop later. In that case, your benefit under the Single Defined Benefit Plan will be frozen as of the date you cease making required contributions and the 403(b) offset will be determined as of that date.

In either case, your pension credits will be payable at your death, retirement, or total and permanent disability under the provisions of the General Church Plan in effect as of December 31, 1995. Those provisions are described later in this Summary. However, the plan provisions are not continued for the purpose of increasing pension benefits beyond those held immediately prior to the date on which a participant fails to make required contributions, and this includes benefits for total and permanent disability.

What if you have been a participant in both the General Church Pension Plan and the Basic Pension Plan?

Here's an illustration of how this works:

Step 1: Monthly frozen accrued benefit from the grandfathered General Church Pension Plan payable at age 65: $200.00
 
Step 2: 20 years of credited service under the grand-fathered Basic Pension formula: $231.00
MINUS:
  403(b) "offset" account monthly benefit value: - $19.97
  Total monthly benefit value from grandfathered Basic Pension Plan: $211.03
 
Step 3: Total SDBP monthly benefit ($200.00 + $211.03): $411.03

Therefore, you get $411.03 from the SDBP plus the value of your 403(b) "offset" account for a total of your grandfathered benefit value.

Immediately following are descriptions of the provisions of the Basic Pension Plan and of the General Church Pension Plan as continued under the Single Defined Benefit Plan. However, the pension benefits described hereafter are subject to the 403(b) offset previously described in this Summary. Be sure to refer back to the descriptions just given in the Introduction of this Summary.