Pension crisis could be looming for at least a million retirees of religious organizations


For Catholic-affiliated organizations alone, about 1 million pensioners are now estimated to be at risk of having reduced or zero pension benefits due to a federal law that exempts religious organizations from providing regulated and guaranteed pensions.

“It’s estimated to be about a million,” Dara Smith, senior attorney for the AARP Foundation, which advocates for older Americans, told The New York Times in a recent interview. And “that one million figure’s estimated to just be Catholic-affiliated organizations,” she added. The number of pensioners affected at other church-affiliated organizations is unknown.

The federal law at issue, the 1974 Employee Retirement Income Security Act, sets minimum standards for most voluntarily established retirement and health plans in the private industry to provide protection for individuals in these plans.

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Among other things, it requires plans to provide participants with important information about plan features and funding and gives participants the right to sue for benefits and breaches of fiduciary duty. If a defined benefit plan is terminated, the law also guarantees payment of certain benefits through a federally chartered corporation, known as the Pension Benefit Guaranty Corporation.

The law, however, does not cover plans established or maintained by governmental entities, churches for their employees, or plans which are maintained solely to comply with applicable workers compensation, unemployment or disability laws.

A church plan, the Pension Rights Center explains, can also be broadly defined to cover employees of hospitals, schools, and other nonprofit organizations that are associated with that church. A plan that is maintained by an organization associated with a church that has as its principal function the administration and funding of a pension plan, can be treated as a church plan.

Many retirees of organizations with church-affiliated plans, like Ralph and Rosemarie Bryden of Rhode Island, are now beginning to feel the pain of that lack of protection for employees of religious-affiliated organizations under the law.

The Brydens, along with 2,700 other pensioners who worked for St. Joseph Health Services, are facing reduced or eliminated payments because the Roman Catholic Church allegedly failed to fund their pensions.

“We used to go traveling,” Rosemarie Bryden, 69, told the Times. “Since things started, we stopped with a lot of other frivolous things.”

Unlike the Brydens, some retirees who feel cheated by “church plans” are now fighting back.

Earlier this summer, reported that more than 100 retirees of the now defunct St. James Hospital of Newark, filed a lawsuit against the Newark Archdiocese, alleging that they lost their pensions because the archdiocese mismanaged the fund.

The retirees were promised pensions but alleged the archdiocese intentionally underfunded and removed assets from the plan, causing it to go broke.

Some longtime former workers for the Catholic Hospital explained that they stopped receiving their pension checks in 2017 while others who should have started receiving payments never got any.

“I feel personally abandoned,” Sharon Holutiak, 66, who would have received a monthly pension, told “The Archdiocese of Newark should have the willingness to be up front and center, to unequivocally address the issues of underfunding, misplaced funding or even ignoring that they did indeed provide for a pension and handle it themselves.”

The diocese has argued that it is shielded by ERISA as well as its funding requirements.

The former St. James Hospital workers are hoping they can get justice by alleging breach of contract, breach of fiduciary duty and promissory estoppel — a legal principle that says a promise is enforceable by law when the promisee suffered a detriment, and the promise is one that could be reasonably relied on, reported.

“The archdiocese not only breached its moral obligations to its former employees, but also its legal obligations as a contracting party and a fiduciary under New Jersey law,” said the lawsuit.

Nearly 60 percent of pastors do not receive retirement or healthcare benefits from their churches.

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