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Ministers, Spouses, and Churches Get Dinged on New Pension Rules


Changes to the Christian Reformed Church’s ministers’ pension fund mean ministers must work until age 66 to collect full benefits, churches have to pay more, and ministers and their surviving spouses will receive less income.

The changes became necessary when Canadian pension regulators changed the rules for funding pension plans in 2008 after several employers went bankrupt, leaving employees without a promised pension.

The Canadian ministers’ pension plan is essentially solvent, but the new rules mean that it is now considered underfunded to the tune of $20 million.

After pension trustee appeals were rejected, government regulators issued an ultimatum: either come up with a plan to make up the $20 million within five years or the pension will be shut down.

The changes proposed by the pension trustees were approved by the CRC’s board of trustees in February, and letters of explanation went out to ministers and churches.

The plan now goes to Synod 2011 (the church’s annual leadership meeting) for approval. Since the plan could be shut down if it isn’t in place by July 1, approval by synod is highly likely.

Even though the U.S. and Canadian pension plans are two separate plans, the denomination is binational and the pension trustees want all CRC ministers to be treated equitably regardless of which country they call home.

Thus, changes apply to all ministers and all churches north and south of the border. These changes have no effect on current pensioners.

What it means for ministers and their spouses

The changes for ministers mean they must now work until age 66 to collect full pension benefits.

Also, for Canadians only, the final salary on which their pension will be based will be frozen at 2010 levels, regardless of wage increases in coming years.

If the minister works until age 66, the automatic benefit provided will now be paid only during his or her lifetime for a minimum of five years. However, if a couple elects to receive a pension that includes a survivor benefit for the spouse, the pension is automatically reduced by 10 percent of what it would have been. Under the old rules a survivor benefit was automatic.

In the example shown in the box, after the minister dies, the spouse could receive up to $3,400 less per year than under the old rules.

There is a spousal subsidy to be paid to all married ministers who retired before 2017. The payment will be paid to the minister or surviving spouse for a maximum of 10 years.

What it means for churches

In the CRC, churches pay for one hundred percent of ministers’ pensions.

The amount paid by churches will increase by 15 percent effective July 1. It is hoped that this will be the last contribution increase needed for several years.

For Canadian churches, that means an increase in the church budget of nearly $1,300 per year per minister.

For U.S. churches, it means an increase of approximately $1,000 per year per minister. That will raise a surplus of about $800,000 that will be transferred into the Canadian plan.

Additionally, the denomination will borrow up to $2.3 million against its Grand Rapids (Mich.) headquarters to help fund the Canadian shortfall.

In 2016, when the Canadian plan is once again considered fully funded, pension trustees and synod will have to decide whether to lower church payments or restore benefits or some combination thereof.

Example is based on a minister due to retire this year at age 65, after 39 years of service, whose final average salary is calculated at $48,763, with a spouse of similar age.

  Before July 1: After July 1:
Ministry couple’s annual pension income $25,398 $24,001
If couple opts for 66 2/3% survivor benefit $25,398* $21,601
Surviving spouse annual income $17,808 $14,401

*currently full pension is not reduced for survivor benefit

Example is for illustrative purposes only

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