The history and value of the pension plan of the Presbyterian Church (U.S.A.)
American Presbyterians have a rich tradition of service. For more than three centuries, we have responded to the call to serve, share Christ’s love, and care for those in need — especially ministers of the Word and Sacrament, who devote their lives to shepherding congregations. But when their ministry ends, who ensures their well-being?
Pension plans in the United States are increasingly rare yet a tremendous benefit to offer employees, alleviating the financial stress and complexities of investment decisions and minimizing worry about future financial needs. This article explores the history and development of the Defined Benefit Pension Plan of the Presbyterian Church (U.S.A.) and highlights its origins, structure, and unique value in providing security to those who have faithfully served the Church, enabling them to flourish in life when their active call is complete.
History of the pension plan
The origins of today's Defined Benefit Pension Plan can be traced back to the establishment of the Fund for Pious Uses in 1717. Although this Fund eventually became what we know today as the Board of Pensions Assistance Program, it had many iterations through the years, from the Board of Ministerial Relief of the Presbyterian Church in the United States of America (PCUSA) to the Sustentation Fund — none of which provided support to ministers during retirement. It was because of these shortcomings that the idea of developing a financial solution for ministers and their families during retirement was born.1
After many years of recognizing this gap in ministerial support, the 1924 General Assembly approved the appointment of a committee, led by an actuary, and tasked it with developing a formalized pension plan. Later that year, this work culminated in the establishment of the Church’s first structured pension plan across any denomination.2 The plan would provide a financial benefit beginning at age 70 — a minimum benefit of $600 per year to be provided for 35 or more years of service and be administered by the newly-established Board of Pensions of the Presbyterian Church.
The plan faced management hurdles until its professional oversight in 1946 stabilized its operations. When the PCUSA united with the smaller United Presbyterian Church of North America in 1958, becoming the United Presbyterian Church in the United States of America (UPCUSA), their plans were consolidated into one profitable pension plan.4 The reunion in 1983 of Northern and Southern denominations that had been separated for 122 years created the Presbyterian Church (U.S.A.). In 1986, a single, comprehensive Benefits Plan was approved, absorbing all existing pension plans into the new Defined Benefit Pension Plan of the PC(USA), which officially launched Jan. 1, 1987.5
A note on church plans
Today’s Defined Benefit Pension Plan of the PC(USA) is first and foremost a church plan. Defined within Section 414(e) of the Internal Revenue Code, church plans are an employee benefits plan established by a denomination or an organization with a primary purpose of maintaining and administering retirement, medical, and other plans to benefit ministers and employees of churches and employees of affiliated organizations controlled by a church or associated with it.
Church plans have the option to elect to be governed by ERISA, an acronym for the Employee Retirement Income Security Act of 1974. It is a federal law identifying minimum standards for healthcare and retirement plans in the private sector. The Defined Benefit Pension Plan opts not to be governed by ERISA because of its strong financial position and good stewardship.
Employees and ministers of churches and employees of PC(USA)-affiliated organizations are eligible to participate in the pension plan through their employer, regardless of the size of the church or organization.
Design of the pension plan
Defined Benefit Pension Plan benefits are based on total pension credits accumulated throughout a career. When a member enrolls in the plan, they accrue credits each year based on a percentage of the greater of effective salary or the median effective salary that year. Dues for the Defined Benefit Pension Plan of the PC(USA) are paid 100% by the employer, with no cost to the beneficiary.
The Defined Benefit Pension Plan also holds an obligation to members that it must be able to provide a determinable benefit amount.6 A long-term investment approach is used to ensure that the plan is well-positioned for continuing success, designed to always be fully funded, and if it were discontinued at any point, would be able to pay all accrued benefits in full.7 The Defined Benefit Pension Plan is funded through employer dues and investment returns, managed by the Board of Pensions. Employers share the financial support for the plan so that members receive equitable pension benefits during retirement, no matter their circumstances.8 At year-end 2024, the plan was funded at 172%.
The Defined Benefit Pension Plan includes three overriding objectives. The first is adequacy of retirement income, simply meaning that the plan is designed to provide enough financial stability, in conjunction with Social Security, to ensure all servants of the Church may live by means similar to those before retirement. This benefit is paid out monthly throughout the member’s retirement.9
The second is the goal of protecting retirement income against inflation, managed through experience apportionments. An uncommon feature among corporate pension plans, experience apportionments are increases in pension credits or benefits due to an influx of actuarial gains from the performance of the plan’s investments.10 This results in a permanent increase in retiree benefits and creates generational equity, meaning apportionments are granted to active, term vested, and pensioners equally.
Apportionments are not guaranteed to be granted each year, as they are tied to the plan’s overall funded status. The greater the funding status, the more opportunity to grant an apportionment to help protect current and future retiree benefits from inflation with minimal risk to the plan. 2025 is the plan's 13th consecutive apportionment year, yielding a cumulative increase of 53.4% since 2013. Finally, and most importantly, is the fulfillment of benefit promises. The plan’s funds are under strict policies and procedures, including policies on prohibited securities approved by General Assembly and by maintaining prudent levels of risk through diverse economic and market conditions. These practices ensure adequate funding and the timely administration of benefits to members.11
Peace of mind
The Board of Directors of the Board of Pensions oversees all investment decisions that affect the fiscal health of the Defined Benefit Pension Plan. The General Assembly of the PC(USA) elects 100% of the members of the Board of Directors, none of whom is employed in the management of the agency. Additionally, the Board is engaged with leading professional actuaries and financial organizations to manage the fund and conduct annual financial audits.
Learn more about the Defined Benefit Pension Plan, including eligibility and vesting, and the value of the full Benefits Plan of the PC(USA).
1Dr. Dan M. McGill, Financial Soundness of the Pension Plan of the Presbyterian Church (U.S.A.), 2nd ed., (Philadelphia: The Board of Pensions of the Presbyterian Church (U.S.A.), 2003), 1.
2McGill, Financial Soundness, 2.
3McGill, 2.
4McGill, Financial Soundness, 3.
5McGill, 3.
6McGill, 3.
7McGill, Financial Soundness, 4.
8McGill, 4.
9McGill, Financial Soundness, 6.
10McGill, 4.
11McGill, 4
