Lay Pension Plans. New Administrator Onboarding (NAO) Program

Transcription

1 Lay Pension Plans New Administrator Onboarding (NAO) Program

2 By the End of this Tutorial You Will Have Learned: The requirements of the Lay Pension System and who must comply The two types of lay pension plans available and how they work The retirement savings vehicle available for all lay employees How to enroll, and make other employment changes (e.g., termination, retirement, compensation changes, etc.) About assessments and how to make contributions to the plans for your lay employees Where you and your employees can get additional information, resources, and assistance 2

3 What is the Lay Pension System (LPS)? Effective January 1, 2013, all employers are required to offer a pension benefit through the Church Pension Fund (or other authorized entity) to lay employees scheduled to work 1,000 or more compensated hours per year (annually) Mandatory: All domestic dioceses, parishes, missions, and other ecclesiastical organizations or bodies subject to the authority of the Church are required to comply with the LPS How do you know if your organization is required to comply with the LPS? Diocesan leadership makes the decision Voluntary: Those who are not required to comply may still participate on a voluntary basis 3

4 What Employees Are Eligible for a Lay Pension? Any lay employee (receiving a Form W-2) can be enrolled in a lay pension plan offered by CPF What Employees Are Required to be Enrolled in a Lay Pension under the LPS? The LPS requires that an employee regularly scheduled for 1,000 or more compensated hours annually be enrolled in a lay pension offered by CPF 4

5 Can an Employee Opt Out of Receiving a Lay Pension? 21+ No age restriction No. If the employee works at least 1,000 compensated hours, the employee MUST be enrolled in a pension plan The employer may not impose age restrictions! An employee who is 16 and working the required hours must be enrolled An employee who is 80 and receiving Social Security and working the required hours must be enrolled All employees working the required hours must be enrolled 5

6 Can the Employer Impose a Waiting Period Before Enrolling a Lay Employee? No waiting period No. If the employee is scheduled to work at least 1,000 compensated hours, the employee MUST be enrolled in a pension plan immediately upon eligibility The LPS removed the employer s ability to impose a waiting period before enrolling the employee If your personnel policies require that an employee work for 12 months, for example, before being eligible for pension, you should revise your policies to be in compliance with the LPS 6

7 The Church Pension Fund Offers Different Plans The Employer Chooses Which to Offer 5% 4% The Episcopal Church Lay Employees Defined Contribution Retirement Plan (Lay DC Plan) 9% The Episcopal Church Lay Employees Retirement Plan (Lay DB Plan) 7

8 The Retirement Savings Plan (RSVP) $ The Retirement Savings Plan All employees can set aside their own money for retirement by enrolling in the Retirement Savings Plan (RSVP). This plan is typically utilized by participants in the Lay DB Plan 8

9 Other Options May Be Available Schools may continue to provide a TIAA-CREF defined contribution plan if it meets the minimum contribution levels required by LPS All Episcopal institutions may continue to provide a non-cpf defined benefit plan if it was in place as of January 1, 2013, and if it meets the minimum benefit levels of the Lay DB Plan 9

10 Checking In: Which Plan Do You Offer? Do you know which plan your organization offers? Lay DC Plan, Lay DB Plan and RSVP, something else? Do you need to adopt a plan? If you re not sure, contact your account manager or Client Services Are you in compliance with the LPS Guidelines? No age requirement, no waiting period, employees enrolled if scheduled to work 1,000+ compensated hours annually (unless adoption for the Lay DC Plan allows for less than 1,000) 10

11 How CPF s Lay Pension Plans Work Lay DC Plan $ $ $?? Employer makes a defined contribution. Employee may also contribute Employee controls investment decisions Employee s balance at retirement is determined by the contributions made and investment performance 11

12 How CPF s Lay Pension Plans Work Lay DB Plan $ $ $?? Employer contributes to the CPF Plan sponsor (CPF) controls investment decisions Employee s pension benefit is based on a formula regardless of investment performance * The Lay Defined Benefit Plan is a qualified plan under Section 401(a) of the Internal Revenue Code, but as a church plan, it is not subject to ERISA. The plan s financial condition is disclosed in the Church Pensions Group s Annual Report, which can be found at Refer to final slide for additional disclaimers. 12

13 Retirement Savings Plan (RSVP) For those typically enrolled in the Lay DB Plan, the RSVP offers a way for employees to save their own money for retirement RSVP is a 403(b) plan that operates like the Lay DC Plan Employees manage contributions, investment elections, and beneficiary designations through a Fidelity NetBenefits Web account Employee contributions can be pre-tax, meaning that they are deducted from income before federal income taxes are calculated Each year the IRS sets the maximum allowable pre-tax contribution employees can make to the RSVP (and the Lay DC Plan combined) Employers may or may not make base and/or matching contributions called discretionary contributions 13

14 How Much Does the Employer Contribute to the Plans? Employer Contribution Employee Vesting Lay DC Plan* Lay DB Plan RSVP Base: minimum of 5% of employee s compensation Match: up to 4% if employee also contributes* Subject to IRS limitations (see irs.gov for more details) Immediate 9% of employee s compensation Employees do not contribute Upon receiving five years of credited service, attaining the age of 55+ while active, or eligible for disability retirement Generally used for employee contributions (preor post-tax) Employer can make discretionary contributions Immediate * The amount (percentage) of employer contributions is specified in the employer s adoption agreement for the Lay DC Plan. The employer can designate other base and match contributions, as long as the base is at least 5% and the base and match combination is at least 9%. 14

15 What Other Combinations Can an Employer Adopt for the Lay DC Plan? The Employer can designate other base and match contributions, as long as the base is at least 5% and the base and match combination is at least 9%* Examples: 5% base + 4% match = 9% total 7% base + 2% match = 9% total 9% base + 0% match = 9% total 11% base + 2% match = 13% total (less conventional and exceeds requirement) * The amount (percentage) of employer contributions is specified in the employer s adoption agreement for the Lay DC Plan. 15

16 What is Considered Compensation for Lay Plans? $ $ Cash stipend Utilities Housing* One-time payments Severance *For purpose of the Lay DC Plan, housing and severance are included in compensation to calculate employer base contributions only (not employer matching contributions or employee salary deferrals). 16

17 How is Housing* Determined? When an employee is provided housing, the amount used to determine the contribution base is as follows: 30% of cash stipend and utilities 40% if meals are included Any additional cash housing allowance is not assessed *For purpose of the Lay DC Plan, housing and severance are included in compensation to calculate employer base contributions only (not employer matching contributions or employee salary deferrals). 17

18 How Do You Enroll or Make Changes in the Plans? Use the What to Do When checklists on the Administrators Resource Center (ARC) for instructions on how to: Add a new lay employee Report a termination or retirement Report a compensation change Report an employee s disability Report a life event (marriage, domestic partnership, divorce, newly born or adopted child, death) 18

19 How Do You Make Contributions to the Plans? Lay DC and RSVP Plans The contribution process may vary, depending on when the Plan was adopted Lay DB Plan Assessment Notices (bills) are sent to the employer monthly Check with your organization or account manager for details To view sample bills and instructions, visit the Understanding Your Bills section of the Administrators Resource Center (ARC) 19

20 Where Can Employees Get Assistance with the Lay DC Plan or RSVP? Fidelity provides employees with support Contribution Calculator 24/7 online access: Account balance and statements Change contribution amounts or asset allocations Change beneficiaries Loan options Hardship withdrawal options Employees should set up a Fidelity NetBenefits Web account to manage contributions, investment elections and beneficiary designations. 20

21 When Can Lay Employees Retire? Normal Retirement Lay DB Plan: Upon attaining the age of 55 or older while active, or eligible for disability retirement Early Retirement Lay DB Plan: Age 55 or older and vested, but with a reduced pension benefit amount Lay DC Plan: Age 55 or older, without incurring IRS penalties Disability Retirement Lay DB Plan: No age or service requirements, but must be active prior to disability Lay DC Plan: Disabled employees are eligible to take withdrawals from the plan without incurring IRS penalties 21

22 What Benefit Does the Employee Receive at Retirement? Lay DC and RSVP Plans Determined by the amount in the employee s account when withdrawals begin Under IRS rules, employees must begin to make minimum withdrawals after age 70½, if no longer working Lay DB Plan Annual Normal Retirement Benefit is calculated as follows: CS x HAC x 1.5% Highest Average Compensation (HAC) is generally the average of the employee s highest compensation during seven out of eight consecutive 12-month periods participating in the plan 22

23 Check Your Understanding???? Is there a minimum age requirement or waiting period to participate? How many compensated hours may a lay employee work to be eligible to participate in a lay pension plan? What is the minimum base contribution percentage an employer must make in the Lay DC Plan? How do I enroll a new lay employee in the Lay DC Plan? Answers on the next slide 23

24 Check Your Understanding: Answers???? Is there a minimum age requirement or waiting period to participate? No. If your organization currently has an age limit or waiting period, you should remove them in accordance with the Lay Pension System. How many compensated hours may a lay employee work to be eligible to participate in a lay pension plan? It depends. LPS requires an employer to provide a lay pension at 1,000 compensated hours annually, but an employer may adopt or amend the Lay DC Plan (only) to use a lower threshold What is the minimum base contribution percentage an employer must make in the Lay DC Plan? 5%. An employer can adopt the plan with a higher base, as long as the base + match equals or exceeds 9%. How do I enroll a new lay employee in the Lay DC Plan? Simple. Visit the Administrators' Resource Center ( and follow the instructions on the What to Do When checklists. 24

25 Check Your Understanding???? True or False? In the Lay DB Plan, lay employees contribute 9% of their compensation. When is a lay employee vested in the Lay DB Plan? True or False? The retirement benefit in the Lay DB Plan is determined by the amount in the employee s account. What is the name of the retirement savings vehicle that allows employees in the Lay DB Plan to contribute to their own retirement savings? Answers on the next slide 25

26 Check Your Understanding: Answers???? True or False? In the Lay DB Plan, lay employees contribute 9% of their compensation. False. Employees cannot contribute to the Lay DB Plan. Employers contribute 9%. When is a lay employee vested in the Lay DB Plan? Five years of credited service, or attain the age of 55+ while active, or disabled True or False? The retirement benefit in the Lay DB Plan is determined by the amount in the employee s account. False. The annual pension benefit is based on a formula consisting of CS x HAC x 1.5%. What is the name of the retirement savings vehicle that allows employees in the Lay DB Plan to contribute to their own retirement savings? The Retirement Savings Plan (RSVP). 26

27 Additional Resources RSVP & Lay DC Plan: Employer Guide A Guide to Benefits Under the Lay Defined Benefit Plan Administrator section of cpg.org for plan information: Administrators Resource Center (ARC): Fidelity (for administrators only): (800)

28 Thank You! If you have any questions about Lay Pensions please contact Client Services.

29 Important Disclosures This information is provided for general informational purposes only and is not intended as financial, investment, legal, tax, or other professional advice. Neither The Church Pension Fund nor any of its affiliates (collectively, the Church Pension Group ) provides, and none of this information is intended to be or should be viewed as, financial, investment, legal, tax, or other professional advice. This presentation is provided for your information only. In the event of a conflict between the information contained in this presentation and the official plan documents, the official plan documents will govern. The Lay DB Plan is a qualified plan under Section 401(a) of the Internal Revenue Code, but as a church plan, it is not subject to ERISA. The Lay DB Plan's financial condition is disclosed in the Church Pension Group Annual Report, which is located on our website at The Church Pension Fund, as sponsor of the Lay DB Plan, continues to monitor the funding status closely. Like many defined benefit plans, the Lay DB Plan currently is not fully funded. The Church Pension Fund retains the right to amend, terminate, or modify the terms of the Lay DB Plan, including the employer assessment rate, and any other benefit plans described in this presentation at any time, without notice, and for any reason. 29