Effective salary includes various types of compensation and/or reimbursements paid by congregations and employers to ministers of the Word and Sacrament and employees. Unique to the Board of Pensions, effective salary is not the same as the taxable income reported to the IRS or the Social Security Administration.
The Board uses salary information reported to it as of May 1 of each year to set median effective salaries for the next year. When a member's annual effective salary is less than the median, pension credits, disability benefits, and death benefits are calculated based on the applicable median salary.
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The Board sets a median effective salary based on salary information for minister members of the Benefits Plan who are serving PC(USA) congregations. The congregational ministers' median effective salary applies to all minister members, whether they serve congregations or not, for purposes of calculating pension credits and benefits.
The Board also sets a median effective salary based on salary information for non-minister members enrolled for pension and/or death and disability coverage.
Median effective salaries are prorated for work schedules of less than 35 hours a week.
Employers must report the annual effective salary for each Benefits Plan member to the Board of Pensions. Effective salary is used in calculating employer dues and member benefits.
Effective salary determines
Salaries must be confirmed at the beginning of each year, even if there is no change. Employers update/confirm salaries online through Benefits Connect.
To accurately calculate and report effective salary, an employer needs to know which compensation to include. The Total Effective Salary Calculator is designed to help with this task, as is Understanding Effective Salary.
Salary changes must be reported online through Benefits Connect within 60 days of the effective date of the change. Salary changes will not be accepted through Benefits Connect more than 60 days before or after the effective date. Timely reporting ensures that congregations and employers are properly invoiced and ministers and employees receive the appropriate benefits.