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Basic Pension Plan

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The Basic Pension Plan

From the Summary Document of the Single Defined Benefit 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 full-time active 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 Pensions and Benefits Fund. Full-time associate ministers who are district-licensed or ordained receive a Year of Service credit when earning at least fifty 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 in Nazarene churches participating in the 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 in simple English. The plan is governed in every particular by (and you can get more details from) the Plan Document. If you have any 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 you contribute also?

No, the plan does not provide for individual participant contributions.

B-3 What happens to the plan funds?

The plan funds are set aside 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.

Section C: Participation in the Plan

C-1 When did you 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--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 that 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 non-payment.

C-4 When do you 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 you 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 you 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 When is your 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, 1947 April 1, 2012
April 20, 1947 May 1, 2012

This is the month in which your benefits are eligible to be paid if benefits have not been paid on an earlier date.

D-2 May you receive benefits before your 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.

D-3 May you begin receiving benefits after your 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.

D-4 When will your 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. Payment will not be made retroactive to the date of initial eligibility but only as of the first day of the next month following approval of your application by the Plan Administrator. 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-3.

Section E: How Much Benefit You Can Earn

Years of
Service
Standard* Participant
Amount
Standard* Survivor's
Amount (60%)

1 $11.00 $ 6.60
2 22.00 13.20
3 33.00 19.80
4 44.00 26.40
5 55.00 33.00
6 66.00 39.60
7 77.00 46.20
8 88.00 52.80
9 99.00 59.40
10 110.00 66.00

11 121.61 72.97
12 133.32 79.99
13 145.15 87.09
14 157.08 94.25
15 169.13 101.48
16 181.28 108.77
17 193.55 116.13
18 205.92 123.55
19 218.41 131.05
20 231.00 138.60
21 243.71 146.23
22 256.52 153.91
23 269.45 161.67
24 282.48 169.49
25 295.63 177.38
26 308.88 185.33
27 322.25 193.35
28 335.72 201.43
29 349.31 209.59
30 363.00 217.80
31 376.81 226.09
32 390.72 234.43
33 404.75 242.85
34 418.88 251.33
35 433.13 259.88
36 447.48 268.49
37 461.95 277.17
38 476.52 285.91
39 491.21 294.73
40 506.00 303.60
41 520.91 312.55
42 535.92 321.55
43 551.05 330.63
44 566.28 339.77
45 581.63 348.98
46 597.08 358.25
47 612.65 367.59
48 628.32 376.99
49 644.11 386.47
50 660.00 396.00

E-1 How much is your 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 H.)

*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. This chart 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). This chart does not apply if you retire after December 31, 1997, and have Years of Service under the World Mission Pension Plan (such Years of Service can be counted solely for the purpose of the increasing adjustment factor of 0.005 used for service of over 10 years--see E-2).

Remember that this benefit is subject to the 403(b) offset described in the Introduction of this Summary.

E-2 How is your earned monthly benefit calculated?

Effective as of January 1, 2005, the two-factor formula below is used to figure your earned monthly benefit at your normal benefit receipt date.

Factor A multiplied by Factor B = Earned Monthly Benefit

Factor A = $11.00 multiplied by "Credited Years of Service" (maximum 50)
Factor B = (As determined below)

Step 1: "Credited Years of Service" plus Years of Service under the World Mission Pension Plan
Step 2: Result of Step 1 minus 10
Step 3: Result of Step 2 times 0.005
Step 4: Result of Step 3 plus 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.

Your earned monthly benefit will not be less than your earned monthly benefit under the provisions of the prior plan on December 31, 1986.

E-3 Is this the amount you will get if you begin receiving benefits on your normal benefit receipt date?

This is the full benefit you would get under the "normal form" of income if you work up to your normal benefit receipt date. The normal form is "life with a 60% survivor benefit." This form pays you a monthly payment as long as you or your eligible surviving spouse live. 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 E-6 for an Early Benefit Option for surviving spouses.

E-4 Will you get less if you retire before your 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 0.006 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:
  1. how many months early you plan to retire; and
  2. how many years of credited service you have.

 

The formula:
Earned Monthly Benefit (see E-1 and E-2) = $_________ = A
Number of months early you plan to retire x 0.006 = __________ = B
A x B = $_________ = C
A - C (this is your Early Retirement Monthly Benefit) = $_________

Remember that this benefit is subject to the 403(b) offset described in the Introduction of this Summary.

E-5 If you elect to retire before your normal benefit receipt date, how is your eligible surviving spouse's benefit determined?

The eligible surviving spouse of a participant who had elected an early retirement option will be eligible for a benefit at age 62 based on 60% of the participant's normal form of benefit without the early retirement percentage reduction. See E-6 regarding an Early Benefit Option for a surviving spouse.

E-6 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 a monthly benefit as early as age 60 with a 0.006 reduction for each month between the date the benefit begins and the month in which the surviving spouse would have reached age 62.

Section F: How Your Benefits Are Paid

F-1 Is there an optional form of benefit on or after your normal benefit receipt date?

Yes. Benefits will be paid to you under the normal form (see E-3) 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% 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.

The election may be made within 60 days preceding the date the benefit begins. 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. 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% of the normal monthly benefit plus (or minus) 0.3 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% of a normal monthly benefit.

"Optional" Pension as Compared to "Standard" Pension

Pension Amounts at Maximum 50 Years of Service Credit

"Optional" Pension "Standard" Pension
Spouse's Age Difference
(in full years)
% of Base Participant AND Widow(er) Receive Participant Receives Widow(er) Receives
+10 93.00 613.80 660.00 396.00
+ 9 92.70 611.82 660.00 396.00
O + 8 92.40 609.84 660.00 396.00
L + 7 92.10 607.86 660.00 396.00
D + 6 91.80 605.88 660.00 396.00
E + 5 91.50 603.90 660.00 396.00
R + 4 91.20 601.92 660.00 396.00
+ 3 90.90 599.94 660.00 396.00
+ 2 90.60 597.96 660.00 396.00
+ 1 90.30 595.98 660.00 396.00

Same Age
as
Participant
90.00 594.00 660.00 396.00

- 1 89.70 592.02 660.00 396.00
Y - 2 89.40 590.04 660.00 396.00
O - 3 89.10 588.06 660.00 396.00
U - 4 88.80 586.08 660.00 396.00
N - 5 88.50 584.10 660.00 396.00
G - 6 88.20 582.12 660.00 396.00
E - 7 87.90 580.14 660.00 396.00
R - 8 87.60 578.16 660.00 396.00
- 9 87.30 576.18 660.00 396.00
-10 87.00 574.20 660.00 396.00

For example, assume:

  1. you begin receiving benefits at age 65;
  2. you have 30 Years of Service Credit; and
  3. your spouse is 26 months younger than yourself.

Adjustment = 0.90 - 0.006 = 0.894 = 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 each individual's and couple's retirement funding needs are unique, this choice is made available. You may want to consult your personal financial advisor regarding which benefit (normal form or optional form) is best for your situation.

Remember that this benefit is subject to the 403(b) offset described in the Introduction of this Summary.

Section G: What Disability Benefits Are Paid

This plan is intended to provide an income for your "retirement" years; however, disability benefits are also available.

G-1 Are any benefits payable if you become disabled before you 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 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 their qualification for disability pension up to age 65.

For eligible participants who are disabled, the Basic Pension may begin as soon as the month following the date that all three of the following conditions are met:

  • If under age 65, disability must be determined by the 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 that 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 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. or Canadian district and who is disabled may qualify for a Basic Pension 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 Canadian equivalent. Evidence of such determination must be submitted with the application. An inactive participant shall be granted only actual Years of Service Credit.

Section H: What You Get if You Become an Inactive Participant

H-1 Will you still get benefits from the plan if you're an inactive participant?

If your vesting percentage is greater than 0%, 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 0% will you fail to get any benefits. However, if you die before receiving benefits, the only benefits payable will be those described in Section E.

H-2 How is your 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

H-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, as a full "period of service," 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.

H-4 If you remain an inactive participant, when may you get your 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. 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-4.

Section I: Other Facts You Need to Know

I-1 Can your 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).

I-2 Do your payments from this plan affect your Social Security benefits?

No. Your benefits from this plan are in addition to your benefits from Social Security. You should make your application for Social Security (and Medicare) benefits 3 months before you wish Social Security payments to begin.

I-3 How do you 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 address where you will get your checks.

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.

I-4 What can you do if your claim is refused?

You have 90 days after you receive written notice that your claim is refused to make a written appeal to your Plan Administrator. 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 construe the provisions of the plan.

I-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 the plan may be changed or terminated.

I-6 What happens if the plan is terminated?

If the plan should terminate, the plan 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.

Files:
Pension Application 667.83 KB

Change of Address Form 210.67 KB

Electronic Funds Transfer Form 244.14 KB

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Created on Monday, 25 June 2007