By Christopher Wells
The Church Alliance represents many religiously affiliated institutions that provide highly specialized retirement and healthcare benefit plans, called denominational benefit plans, to clergy and lay workers across the country. While “church plan” is a defined legal term, clear, accessible explanations of denominational benefit plans as a distinct type of church plan are less readily available.
This blog post is intended to fill that gap. It provides education on what denominational benefit plans are within the broader category of church plans. It explains the meaning of each term. It traces the more than 300-year history of church plans and denominational benefit plans. And it highlights the governance structures and design features that enable denominational benefit plans to effectively serve the retirement and healthcare needs of clergy and lay workers.
Church plans vs. denominational benefit plans
Congress defined the term “church plan” when it passed the Employee Retirement Income Security Act (ERISA) in 1974. The term refers to an employee benefit plan established and maintained “by a church or by a convention or association of churches.” Church plans may include retirement or healthcare benefit plans that a single religiously affiliated institution has established for its employees, as well as those that multiple religiously affiliated institutions have established for a broader subset of employees. To avoid excessive government entanglement in the affairs of religious organizations, Congress exempted church plans from many of ERISA’s requirements for employee benefit plans.
The more specific term “denominational plan” refers to a church plan that a religious denomination has organized for churches and other affiliated institutions within its denominational network. By definition, denominational plans provide benefits on behalf of multiple participating employers, often including churches, synagogues, and religiously affiliated social service agencies like parochial schools, food kitchens, day cares, and nursing homes.
Professional denominational benefits organizations operate denominational benefit plans to provide for the well-being of clergy and lay workers serving congregations and communities. Many of the Church Alliance’s member organizations provide benefits on behalf of all or many of an affiliated denomination’s churches and church-related organizations. Church Alliance member organizations utilize the expertise of trained professionals to administer benefit plans in the best interests of plan participants. Denominational leaders oversee their operations.
A 300-year track record
Churches and their denominational benefit plans have a strong track record of providing for clergy and lay workers. As noted in the Congressional Record, religious institutions have been managing church plans, particularly retirement plans, for more than 300 years. During a discussion about the United States’ retirement plans in 1978, Rep. Barber B. Conable Jr. observed that since the emergence of the first religiously affiliated retirement plans “dating back to the 1700s,” the country’s religious organizations have been “operating responsibly and providing retirement coverage and benefits for the clergymen and lay employees of the churches and their agencies. ” He did not exaggerate. The Presbyterian Church (U.S.A.), for example, first established its Fund for Pious Uses, a precursor to its modern Board of Pensions, in 1717. On its website, GuideStone Financial Resources, which was established by the Southern Baptist Convention, notes that in more than 100 years of operations, the organization has never missed a retirement benefit payment to a participant.
Optimized for clergy and lay workers
Denominational religious leaders are uniquely incentivized to care for the interests of denominational benefit plan participants. This is one reason, in addition to a strong track record, that many denominational employers and their employees trust denominational benefits organizations to manage benefit plan assets. But there are other reasons that many religiously affiliated employers are part of denominational benefit plan arrangements.
As noted above, the plans provide coverage for denominationally organized networks that often include hundreds or thousands of denominationally affiliated employers. This means that if a covered employee takes a new job with a different denominational employer, the employee’s benefits will not be disrupted. The size of denominationally organized networks also creates economies of scale for plan participants. This means that denominational benefits organizations can often administer the plans in exchange for relatively low fees from employers and covered employees.
Unique benefit structures are another consideration. Denominational healthcare plans, for example, often provide atypically robust coverage for the management of chronic conditions, mental health services, and preventive care. Such benefits are designed to ensure the long-term well-being of clergy and lay workers. Denominational leaders know that many denominational employees will spend their entire careers serving the denomination’s mission. They are uniquely incentivized to make short-term investments in preventive care services in order to stave off the development of chronic diseases that will become more costly later in life.
These factors help to illustrate why denominational benefit plans are so effective in meeting the benefit needs of clergy and lay workers.
A sacred tradition
For centuries, religious communities have taken responsibility for optimizing the well-being of those who serve their congregations and communities. Out of respect for this sacred tradition of excellence and care, denominational religious leaders created today’s denominational benefits organizations, many of which trace their institutional origins to the early 20th century, for the exclusive purpose of stewarding denominational benefit plan resources. The Church Alliance’s member organizations are proud to continue this sacred legacy.
You can learn more about Church Alliance member organizations’ commitments to excellent stewardship of benefit plan resources here.
