Frequently Asked Questions about The Basic Pension Plan
This section applies only to those who were participants in the Basic Pension Plan as of December 31, 1995, or prior. There are no new participants after December 31, 1995.
Section A: Those in this Plan
This portion of the Church of the Nazarene Single Defined Benefit Plan and this section of the Summary cover active, full-time district-licensed and ordained ministers in the Church of the Nazarene for service as shown in district journals on districts participating in payment of the U.S. Pensions and Benefits Fund. Full-time associate ministers who are district-licensed or ordained receive a Year of Service credit when earning at least 50 percent of their compensation from such ministry and who perform at least 30 hours per week of paid service for 30 or more weeks during the year. Evangelists receive a Year of Service credit for having conducted compensated services for 30 or more Sundays or 26 or more revival events in Nazarene churches participating in the U.S. Pensions and Benefits Fund.
The Basic Pension Plan began paying benefits April 1, 1971, for years of service accrued since 1908. It was restated in full as a qualified Church Plan for U.S. tax purposes, effective January 1, 1987.
The information here is only a Summary of parts of the Plan. More details regarding how the Plan is governed are available in the Plan Document. If you have questions, contact Pensions and Benefits USA.
Section B: How the Plan Works
B-1 – Who pays for the Plan?
Churches on participating districts make all contributions to the Plan through the Pensions and Benefits Fund.
B-2 – Do I contribute also?
No, the Plan does not provide for individual participant contributions.
B-3 – What happens to the Plan funds?
The Plan funds are for the exclusive benefit of participants and their beneficiaries. These funds will be invested by the Investment Committee of the General Board and will accumulate to provide benefits under the Plan.
B-4 – How are the benefits taxed on receipt after retirement?
Generally, the benefit payments will be treated as ordinary income and may be subject to some taxes. All benefits paid to ministerial participants will be declared as tax-free housing allowance and, to the extent that IRS housing allowance provisions are met, they may be excluded from ordinary income. See Memo #6 – Housing Allowance in Retirement at pbusa.org.
Section C: Participation in the Plan
C-1 – When did I become an active participant?
You became eligible if you met the following requirements prior to December 31, 1995
- You were an active, full-time ordained Nazarene minister employed by a church or district participating in the Pensions and Benefits Fund; or
- You were an active, full-time licensed, commissioned, or credentialed member of a district participating in payment of the Pensions and Benefits Fund.
Note: There are no new participants after December 31, 1995.
You were automatically enrolled on your Entry Date (the January 1 after you met these requirements) unless you were employed as an attorney, an engineer, or an independent professional retained by the Board of Pensions and Benefits USA, the General Board of the Church of the Nazarene, or any local church or district.
Service of employees of Nazarene church agencies, such as the General Board, Nazarene Bible College, Nazarene Theological Seminary, Nazarene Publishing House, or Nazarene colleges or universities, is not covered by this Plan.
If you entered the Plan before January 1, 1987, and were an active participant on December 31, 1986, you were automatically an active participant on January 1, 1987. Your Entry Date under the prior Plan did not change.
C-2 – If you serve a local church or district with a local minister's license, will that count as years of service for credit?
No, only service as a district-licensed or ordained minister counts toward Years of Service credit.
C-3 – If you serve a church which does not participate in payment to the Pensions and Benefits Fund, will your pension credit be affected?
Yes. In the event a church or churches you serve fail to contribute to the Pensions and Benefits Fund during your service with them, Years of Service may not be credited for those years. Subsequent Years of Service to a church or churches which pay the Pensions and Benefits Fund allocation in full during your Years of Service with them may reduce a previous penalty for nonpayment.
C-4 – When do I become an inactive participant?
You will become an inactive participant on any of the following:
- The date you are discharged or quit;
- The date you are placed on leave of absence without salary; or
- The date you are no longer eligible (see C-1).
C-5 – When do I stop being a participant?
You stop being a participant on either of the following:
- The date of your death; or
- The date you are discharged or quit if your Vesting Percentage is zero.
C-6 – Can I become an active participant again?
Yes, as soon as you again qualify for coverage (see C-1).
Section D: When You May Begin Receiving Benefits
D-1 – What is my Normal Benefit Receipt Date?
Your Normal Benefit Receipt Date is the first day of the month on or after the date you reach age 65. For example:
|Your Birth Date||Your Normal Retirement Date|
|April 1, 1948||April 1, 2013|
|April 20, 1948||May 1, 2013|
D-2 – May I receive benefits before my Normal Benefit Receipt Date?
Yes. You may choose to have your benefits paid on your early retirement date. Your Early Retirement Date may be the first day of any month on or after the later of:
- The date you stop working prior to age 65;
- The date you reach age 62.
The Plan requires a participant who receives a Retirement Benefit prior to their 65th birthday to be retired, unassigned, or serving only on a part-time basis if employed by the church.
D-3 – May I begin receiving benefits after my Normal Benefit Receipt Date?
If you continue working and do not apply for benefits, your benefits will be paid on your Late Benefit Receipt Date. Your Late Benefit Receipt Date will be the month on or after the date you apply for benefits.
Participants eligible for a monthly benefit from this Plan that choose not to apply until after their 65th birthday may also be eligible for a retroactive benefit. Eligibility criteria include:
- Age 65 for the participant and age 62 for the surviving spouse; and
- Participant must have ceased to accrue years of service.
The Plan document provides for payment of a retroactive benefit based on the form of benefit elected by the participant at the time of application. Any benefits which could have been received had the participant retired at his/her Normal Retirement Date are determined with the help of the Plan’s actuaries, and paid for the remainder of the participant’s or surviving spouse’s lifetime, if applicable. Any 403(b) Offset amount to the regular benefit is included in determining the retroactive amount.
A participant may not receive a retroactive benefit for any service also included as an eligible year of service under the Plan (i.e., no double credit for a year of service and retroactive benefits).
D-4 – When will my benefit begin?
Payment of your Vested Benefit will begin on your Normal Benefit Receipt Date, Early Retirement Date, or Late Benefit Receipt Date, as applicable, if you have applied for the benefit. Payments will begin as of the first day of the next month following approval of your application by the Plan Administrator—the Board of Pensions and Benefits USA. Your Vesting Percentage will be determined as of the month prior to the date you begin receiving benefits. If you meet the requirements in D-2, you may have payment of your Vested Benefit start on your Early Retirement Date. However, payments will be reduced by the percentage as indicated in E-7.
Section E: How Much Benefit you Can Earn
E-1 – How much is my monthly benefit?
As you perform covered service (see Section C), you earn benefits. This Earned Benefit will grow with your service. (For important vesting information, see Section I.)
See Addendum A– Current Basic Pension Benefits at the end of this Summary for the current chart of benefits. This chart is effective January 1, 2005. It does not include any of the actuarial adjustment factors applicable to those choosing an Early Retirement Benefit or other Optional Forms of benefit.
E-2 – What about Canadian pension benefits?
Addendum A does not apply if you are on a Canadian District (your benefit was frozen as of the date the Canadian districts withdrew from the Plan). Exceptions may apply outside the U.S.
E-3 – What about Missionary Pension Plan benefits?
Addendum A does not apply if you retire after December 31, 1997, and have years of service under the Missionary Pension Plan (such years of service can be counted solely for the purpose of the increasing adjustment factor of .005 used for service of over 10 years—see E-4). Exceptions may apply outside the U.S.
Remember that this benefit is subject to the 403(b) Offset described in the Introduction of this Summary.
E-4 – How is my Earned Monthly Benefit calculated?
Effective January 1, 2005, the two-factor formula below is used to figure your Earned Monthly Benefit at your Normal Benefit Receipt Date.
|Factor A =||$11.00 x Credited Years of Service (maximum 50)|
|Factor B =||(As determined below)|
|Factor A x Factor B =||Earned Monthly Benefit|
Step 1: Credited Years of Service plus Years of Service under the Missionary Pension Plan (if applicable)
Step 2: Result of Step 1 - 10
Step 3: Result of Step 2 x .005
Step 4: Result of Step 3 + 1.00
Step 5: Result of Step 4 = Factor B
Your Credited Years of Service is the sum of your Years of Service which start when you become an active participant of the Plan (your Entry Date—see C-1) and ends on the date you are discharged, quit, or begin receiving benefits. A participant shall receive a full one Year of Service credit for the year in which the participant terminates from full-time service or begins receiving benefits, whichever occurs first.
E-5 – Is this the amount I will get if I begin receiving benefits on my Normal Benefit Receipt Date?
This is the full benefit you would get under the Normal Form if you work up to your Normal Benefit Receipt Date. The Normal Form is “life with a 60 percent survivor benefit.” This form pays you a monthly payment as long as you or your eligible surviving spouse lives.
E-6 – If I remarry after benefits begin, will my new spouse receive a survivor’s benefit?
To be eligible, your surviving spouse must have been married to you for not less than one year prior to your death and be at least age 62. See Section F for an Early Benefit Option for a surviving spouse.
E-7 – Will I get less if I retire before my Normal Benefit Receipt Date?
Your earned monthly benefit will be less because your service is not the same as at the Normal Benefit Receipt Date. Your earned monthly benefit will also be actuarially reduced by .006 per month of early retirement to reflect that payments begin at a younger age and are paid for a longer time. The total percentage is based on the number of months you retire early as shown in the example below. To find your Early Retirement Benefit you need to know:
- How many months early you Plan to retire; and
- How many Credited Years of Service you have.
|Earned Monthly Benefit (see E-1 and E-2)||$____________ = A|
|Number of months early you plan to retire x .006||____________ = B|
|A x B||$____________ = C|
|A - C||$____________ = Your Retirement Benefit|
Remember that this benefit is subject to the 403(b) Offset described in the Introduction of this Summary.
E-8 – If I elect to retire before my Normal Benefit Receipt Date, how is my eligible surviving spouse’s benefit determined?
The eligible surviving spouse of a participant who had elected an Early Retirement Benefit will be eligible for a benefit at age 62 based on 60 percent of the participant’s Normal Form of benefit without the early retirement percentage reduction. See Section F regarding an Early Benefit Option for a surviving spouse.
Section F: How Much Benefit you Can Earn
F-1 – What surviving spouse benefits are paid by the Plan?
The survivor’s standard benefit is 60 percent of the participant’s Normal Form of benefit and may be payable as early as age 62. Optional surviving spouse benefits are determined at the time of application by the participant (See Section G).
F-2 – Can your eligible surviving spouse begin receiving benefits before age 62?
Yes. Your eligible surviving spouse may begin receiving benefits at age 62 without any required actuarial reduction. Your eligible surviving spouse may begin receiving benefits as early as age 60 with .006 reduction for each month between the date the benefit begins and the month in which the surviving spouse would have reached age 62.
Section G: How Your Benefits Are Paid
G-1 – Is there an Optional Form of benefit on or after my normal benefit receipt date?
Yes. Benefits will be paid to you under the Normal Form (see E-5) unless the participant elects, on a timely basis, the Optional Form of benefit. The Optional Form allows a participant to actuarially reduce the standard monthly benefit to purchase a 100 percent survivor monthly benefit for an eligible spouse. The present dollar value of both benefits is the same. The Optional Form simply reflects your choice to defer current amounts on an actuarially determined basis in order to benefit your surviving spouse.
No change of election may be made except within the 30 days following the notice of the monthly benefit amounts determined by the Plan Administrator—the Board of Pensions and Benefits USA. After that date, the option is permanently fixed.
The actuarial adjustment in the participant’s monthly benefit is determined by reducing the monthly benefit to 90 percent of the normal monthly benefit plus (or minus) .3 percent for each full year by which the participant’s date of birth follows (or precedes) the date of birth of the participant’s spouse. Maximum adjustment is limited to 99.9 percent of a normal monthly benefit.
“Optional” Pension as Compared to "Standard" Pension
See Addendum B Comparison of Standard to Optional Benefits at the end of this Summary for a comparison. The chart is intended to be used as an example of how Optional Benefits are calculated, however, the results displayed may not represent your actual benefit. The actual benefit will be calculated at the time of your application. This chart is effective January 1, 2005.
For an additional example, assume:
- You begin receiving benefits at age 65;
- You have 30 Years of Service credit; and
- Your spouse is 26 months younger than yourself.
Adjustment = .90 - .006 = .894 or 89.4%
Standard Form of Monthly Benefit:
- $363.00 to Participant
- $217.80 to Surviving Spouse (60%)
Optional Form of Monthly Benefit:
- $363.00 x 89.4% = $324.52
- $324.52 to Participant
- $324.52 to Surviving Spouse (100%)
Since the retirement funding needs of each individual and couple are unique, this choice is available. You may want to consult your personal financial advisor regarding which benefit (Normal or Optional Form) is best for your situation.
G-2 – Are Optional Benefits subject to 403(b) Offsets?
Yes, all benefits are subject to the 403(b) Offset described in the Introduction of this Summary.
Section H: What Disability Benefits Are Paid?
This Plan is intended to provide an income for your retirement years; however, disability benefits also are available.
H-1 – Are any benefits payable if I become disabled before I reach age 65?
A participant who is disabled and who is a member of a U.S. district (and such a participant’s widow or widower) may qualify for the Basic Pension benefit with as few as five Years of Service credit. In addition to the actual Years of Service credited, eligible participants may be granted one-half Year of Service credit for each year from their attained age at the time of qualification for disability pension up to age 65, assuming they are in full-time active service on January 1 in the calendar year they apply.
For eligible participants who are disabled, the Basic Pension benefit may begin as soon as the month following the date all three of the following conditions are met:
- If under age 65, disability must be determined by the U.S. Social Security Administration.
- The participant’s completed application has been received and approved for benefits.
- The district has granted retirement status to the disabled participant or the Advisory Board has indicated they will recommend retirement status at the next district assembly.
Should the retirement relationship not be granted at the first district assembly following the granting of the Basic Pension benefit due to disability, the pension will be suspended until all qualifications have been met.
An inactive participant who is no longer a member of a U.S. district and who is disabled may qualify for a Basic Pension benefit upon completion of a minimum of five Years of Service and upon approval of the inactive participant’s application. If under age 65, disability must be determined by the U.S. Social Security Administration or its equivalent. Evidence of such determination must be submitted with the application. An inactive participant shall be granted only actual Years of Service credit. A benefit cannot commence until an application is received.
Section I: What you get if you become an inactive participant?
I-1 – Will I still receive benefits from the Plan if I'm an inactive participant?
If your Vesting Percentage is greater than zero percent, you will receive a monthly benefit. This amount is your Vested Benefit. This benefit cannot be taken from you. Only if your Vesting Percentage is zero percent will you fail to receive any benefits. However, if you die before receiving benefits, the only benefits payable will be those described in Section E.
I-2 – How is my Vesting Percentage determined?
Your Vesting Percentage is determined by your years of vesting service. This percentage is determined from the following schedule:
|Years of Vesting Service||Percentage|
|Less than 10||0%|
|10 or more||100%|
I-3 – How is Vesting Service determined?
Vesting Service is the sum of your Periods of Continuous Service. A Period of Continuous Service starts on your Entry Date (see C-1). It ends on the date you are discharged, quit, or begin receiving benefits. It includes the year in which the participant terminates from full-time service or begins receiving benefits, whichever occurs first.
If you worked or work for one or more Nazarene church agencies or as a missionary, or if you have years of service qualifying under the Pension Plan of the Church of the Nazarene Canada, that service will count as Vesting Service. Your Vesting Percentage will be determined as of the date you no longer accrue service credit with a participating employer.
I-4 – If I remain an inactive participant, when may I get my benefit?
Payment of your Vested Benefit will begin on your Normal Benefit Receipt Date if you have applied for the benefit (see D-1). Payment will not be made retroactive to the date of initial eligibility but only as of the first day of the month next following approval of your application by the Plan Administrator—the Board of Pensions and Benefits USA. If you meet the retroactive benefits requirements in D-2, you may have payment of your Vested Benefit start on your Early Retirement Date. However, payments will be reduced by the percentage as indicated in E-7.
Section J: Other Facts You Need to Know
J-1 – Can my benefits be paid to someone else?
Benefits under the Plan cannot be transferred, assigned, or pledged, except in the case of a Qualified Domestic Relations Order (QDRO).
J-2 – Do my payments from this Plan affect my Social Security benefits?
No. Your benefits from this Plan are in addition to your benefits from Social Security. You should make application for Social Security (and Medicare) benefits three months before you wish Social Security benefits to begin.
J-3 – How do I make a claim for benefits under the Plan?
Apply for benefits to your Plan Administrator—the Board of Pensions and Benefits USA. You will need to complete all necessary forms and supply needed information, such as the account number for electronic funds transfer (EFT).
Your claim will be reviewed and a decision made within 90 days. In some cases the decision may be delayed for an additional 90 days. If so, you will be notified in writing of the delay and the reason for the delay.
If your claim is approved for payment of a monthly benefit, you will be notified in writing stating the years credited and the amount of your benefit. You will be given the opportunity to change your benefit election and to have your benefit electronically deposited into your bank account.
If you make a claim and all or part of it is refused, you will be notified in writing. You will be told (1) why your claim was refused; (2) the specific provisions of the Plan governing the decision; (3) what additional information is needed, if any; and (4) what steps you should take if you wish to have your claim denial reviewed.
J-4 – What can I do if my claim is refused?
You have 90 days after receiving written notice that your claim is refused to make a written appeal to your Plan Administrator—the Board of Pensions and Benefits USA. You or your representative also may review Plan documents and submit issues and comments in writing. A decision will be made on your appeal within 90 days. In some cases the decision may be delayed for an additional 90 days. If so, you will be notified in writing of the delay and the reason for the delay. The Plan Administrator has the right to interpret the provisions of the Plan.
J-5 – Can the Plan be changed or discontinued?
The Plan can be changed at any time. You will be notified of any changes that affect your benefits. The Plan is designed to safeguard your interests. It is intended that the Plan will be continued, but it may be changed or terminated.
J-6 – What happens if the Plan is terminated?
If the Plan should terminate, its assets will be used on a priority basis to provide promised benefits for all vested Plan participants. Specific terms are contained in the Plan document that is available from the office of Pensions and Benefits USA.
J-7 – Do I accrue Years of Service under the Plan if I continue to serve in an otherwise eligible assignment after my monthly benefits begin?
No. Once you have begun to receive a benefit under the Plan, you may not accrue any additional Years of Service credit.
ADDENDUM -ACurrent Basic Pension Benefits (effective January 1, 2005)
|Years of Service||Standard Participant Amount|