How is the Defined Benefit Plan funded?
Each participating church or organization contributes 10.5% of the annual compensation of each participating employee to the fund. Please see the Pastors Compensation Calculator for more details on how “compensation” is defined for pension purposes.
The minimum annual contribution that must be made to the plan on behalf of any employee is $500. (This rule applies to employees whose total annual compensation is under $4,762, as 10.5% of their compensation would be under $500 per year.) Please note that there is also a special contribution rate for church plants (only so long as they are classified as a church plant by the conference – once the congregation becomes a fellowship, regular pension plan contributions apply). Church plants pay at a rate of $500 per year for as long as they are classified a church plant. Although actual compensation figures for low-income pastors and pastors of church plants should be reported, the Human Resources office will make an adjustment to the pension contribution report to bring the annual contribution up to $500.
The church or other employer pays into the plan on behalf of the employee – neither the employer nor the employee are allowed to make additional payments into the plan over and above the set contribution amount. Those who wish to invest funds in some additional way are encouraged to seek out a personal investment opportunity such as an IRA or 403(b) account. (For information about such investment vehicles, contact Human Resources, the Free Methodist Foundation or a personal financial advisor.)