Photo by Kenny Eliason on Unsplash.
A bill introduced to the U.S. House of Representatives could provide pastors with a two-year window for opting into Social Security contributions, even if they have previously opted out of the program. Currently clergy can opt out of the public insurance program on religious or conscientious grounds, but the decision is irreversible.
Known as the “Clergy Act,” the legislation (H.R. 6068) was passed by the House Ways and Means Committee with bipartisan support.
Geneva Benefits Group — the PCA committee that guides pastors, ministry staff, and church administrators through financial planning and benefits issues — encourages pastors to participate in Social Security. The new legislation, ministry leaders say, creates an opportunity for PCA pastors to prepare for retirement and protect their families in case of disability or death.
When it comes to the retirement health of PCA pastors, the data reveals troubling trends. In 2011 Geneva surveyed pastors about their retirement readiness and 70% of pastors reported not having sufficient savings for retirement. As of 2023, 85% of PCA pastors had less than $200,000 saved for retirement. More than 34% of respondents were not contributing to the Social Security program. In the ensuing 13 years, that number hasn’t changed, according to Geneva staff.
Many pastors opt out of Social Security in order to save the 15.3% of their income that clergy must contribute. Though pocketing the extra income is appealing, Ed Dunnington, president of Geneva, calls the decision, “a short-term solution with a catastrophic long-term effect.”
Payments from Social Security make up 40- 60% of the retirement income for an average American. If pastors opt out of this program, Dunnington notes, that income will need to come from somewhere else.
Based on the 2011 survey, Geneva believes the number of pastors without adequate retirement savings will quadruple by 2035.
In their work with pastors, Geneva’s financial planning advisors have seen the percentage of pastors who opt out of Social Security contributions hold steady over the years. Based on the 2011 survey, Geneva believes the number of pastors without adequate retirement savings will quadruple by 2035. Dunnington said Geneva will need $25 million in its Relief Fund because it will need to distribute $5 million each year to keep retired ministers, widows, missionaries, and ministry couples out of poverty.
As a result of the 2011 study, Geneva created its Call Package Guidelines with advice for pastors, churches, and presbyteries. It also now employs a team of financial planning advisors who are also ordained teaching elders. “They understand the complexity of ministerial finance,” said Will Chang, Geneva’s investment specialist.
Chang and Dunnington urged PCA pastors to reach out to Geneva for advice before deciding to opt out of Social Security.
“We are here to shepherd people through this process,” Chang said. “We are willing and ready to help and serve the PCA in this way.”
The next step for the Clergy Act is for the bill to come before the full House. After being approved there, it must be considered and approved by the Senate. Pastors who want to advocate for the bill’s passage should contact their congressional representatives and ask them to vote in favor of it.
Read the entire bill here. Read Geneva’s Q & A on the social security exemption here.