Portman Introduces Bill to Clarify Pension for Clergy Workers
November 20, 2015 - 2:47 PM
Washington, D.C. – Today, U.S. Senator Rob Portman (R-Ohio), along with U.S. Senator Ben Cardin (D-MD) and Representatives Pat Tiberi (R-OH-12) and Richard Neal (D-Mass.-1), announced that they have introduced the Church Plan Clarification Act of 2015 to support the retirement security of our nation’s clergy, church lay workers, and their families. The Church Plan Clarification Act clarifies the application of certain tax and retirement laws and regulations to the unique structures of church pension plans.
“Those who dedicate their life to serving a church, synagogue or other religious organization should be able to have peace of mind when they retire,” Portman stated. “Our bill will make important reforms to ensure financial security for those who have devoted their lives to faith.”
“Retirement security should not be based on faith when you dedicate your working life to serving a church, synagogue or other religious entity,” said Cardin. “Many church plans date back to the 18th century, and our complicated tax system hasn’t always kept up with the times. More than 1 million clergy, faith institution workers, and their dependents deserve the peace of mind that comes with the financial security during retirement that we wish for every American.”
“Unintended consequences created by our overly complex tax code could impact the retirement security of more than one million clergy and lay workers at faith institutions across the country,” said Tiberi. “This bill would correct these inequalities to ensure that those who spend their lives working in the name of their faiths have the same retirement security as their private-sector counterparts.”
“This common sense initiative will make retirement security easier for members of the clergy and our religious institutions,” said Neal. “I am pleased to introduce bipartisan, bicameral legislation that will simply the tax code to fix long-standing problems to give our faith leaders the ability to save for retirement.”
In recognition of their unique status, most church retirement plans are exempt from the Employee Retirement Income Security Act of 1974 (“ERISA”) and are instead subject to special laws and regulations that reflect the distinctive issues that these plans and churches confront. Church retirement plans are subject to stringent state and federal laws and Church Alliance regulations, including state fiduciary standards, state contract law, and Internal Revenue Code requirements. Church retirement plans ensure the stability of participants’ investments by applying many of the same strong safeguards applied to corporate and public pension funds. Moreover, churches and synagogues have a strong lifelong relationship with employees and are motivated to provide for and serve the clergy and church lay workers who have dedicated their lives to working for religious institutions.
Due to their distinctive structure, certain legislative and regulatory changes have unintentionally resulted in uncertainty and/or compliance issues for these plans. The Church Plan Clarification Act of 2015 (S. 2308/H.R. 4085) corrects five legal/regulatory issues confronting church retirement plans:
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