Defined Benefit Plan

Beginning in the mid-1960's Moody Bible Institute (MBI) maintained the MBI Pension Plan (Pension Plan) to provide for the retirement income needs of MBI employees. This Pension Plan was not funded by employee contributions, but rather generated all of its accumulations from regular cash contributions by MBI and from investment gains on those contributions.

Due to concern over the funding demands that these types of plans can create by fluctuating investment returns, the Board of Trustees asked MBI's leadership to undertake a study of alternate approaches to its programs for retirement income benefits. This study brought the Administration to recommend and the Board of Trustees to approve and implement the following changes:

  1. The MBI Pension Plan was closed to the entry of new participants as of January 1, 2006.
  2. A group of existing Pension Plan participants who met the "Grandfathered Rule" were permitted to continue to accrue benefits under this plan. The Grandfathered Rule was meant for those employees who had attained age 40 as of January 1, 2006, who had five or more years of vesting service (as defined in the Pension Plan) as of January 1, 2006, and whose combined age and vesting service totaled 50 or more on January 1, 2006.
  3. Pension Plan Participants who did not meet this Grandfathered Rule had their pension plan benefit "frozen" as of December 31, 2005. A "frozen benefit" means that your Pension Plan benefits payable at normal retirement do not increase after December 31, 2005. Pension Plan participants who had not yet achieved five years of vesting service continued to accrue vesting service for employment beyond December 31, 2005, and could thus secure a non-forfeitable right to this frozen benefit.
  4. Employees with a "frozen benefit" were then automatically enrolled as participants in the MBI Matched Savings Plan as of January 1, 2006 (as were eligible persons employed by MBI after December 31, 2005).

General Provisions of the MBI Pension Plan

The MBI Pension Plan benefit does not provide a cash benefit to employees, but rather commits to pay a specified benefit amount at retirement (age 65) in the form of a fixed monthly annuity. This pension benefit is calculated by using a formula which multiplies a variable by the employee's length of service, final average earnings, and the Social Security's covered compensation amount. Below is the current pension formula:

Final Average Earnings times 0.95% or (.0095)


Final Average Earnings that exceed your Covered Compensation times 0.65% or (.0065)


Years of Benefit Service (up to 30 years)

Pension benefits are fully earned once an employee accrues 5 or more years of vesting service. Vesting service is earned 1) if full-time: a year of vesting service for each year employed. Partial years of service may also be credited; 2) if part-time: a year of vesting service for each year worked at 1,000 hours or more.

Benefit service is accrued for full-time employees at a year for every year of vesting service when the employee is age 21 or older on or after January 1, 1985; and age 25 or older before January 1, 1985.

Final average earnings is the greater of: 1) average monthly earnings during the 60 consecutive months immediately before employment ends; 2) average monthly earnings for the five consecutive calendar years in which earnings were highest.

Covered compensation is the average annual earnings subject to Social Security taxes for the 35 year period ending at retirement age under Social Security. This means it is determined by an employee's year of birth - and based on the covered compensation tables published by the Internal Revenue Service.

More Information

Pension Benefit Estimate Chart

Contact Erica Loring, Benefits Administrator, for any additional information.

Human Resources Office