Church Plan Precedent

“This is the first time I’ve heard of a one-time payout from a diocese to end a pension altogether,” [Charles] Zech [founding director of the Center for Church Management] said. “You would hope a faith-based organization would do better than that by their employees. The whole thing just doesn’t seem very pastoral to me. We expect more from our church leaders.”

Also the first time for me but church plans, being exempt from ERISA protections (as are public plans), might just be able to get away with this. Which could give ideas to those who are not as God-fearing as the Diocese of La Crosse, as reported:

But that all changed last weekend when he received a letter informing him that his longtime former employer, the Diocese of La Crosse, plans to terminate its pension plan for lay employees this summer, replacing it with an undetermined one-time payment.

In the letter, Bishop William Patrick Callahan informed members of the diocese’s Lay Employees’ Retirement Plan that the plan has been underfunded for years.

“After much analysis, discussions and prayers, it has been determined that it is necessary to terminate the Diocese of La Crosse Lay Employees’ Retirement Plan at this time,” Callahan wrote in the letter dated Feb. 27 and received by many employees last weekend.

Callahan’s letter notes that the pension plan was frozen in 2007, meaning no new employees were offered the pension benefit and current members’ accrued benefits didn’t increase after Dec. 31, 2006. In the meantime, he wrote, the diocese continued to bill parishes and allocate funds from the Diocesan Annual Appeal to help make up for the shortfall in the underfunded plan, but the efforts weren’t enough to fully fund it.

Though diocese officials declined to comment for this story, a follow-up statement released by the diocese the day after the Leader-Telegram reported the plan termination indicates church leaders “anticipate the payouts at plan termination to be in the mid-90% range of the plan’s total actuarially equivalent value of benefits.” However, diocese officials declined to clarify how payments would be determined.

“It seems to be immoral for a church to screw former employees who they made a promise to and force them to live out their lives in poverty or financially hurting,” [Norman] Stein said. “You have other choices. For a church to choose to steal from its employees, and ultimately that’s what this really is, is unfortunate.”

5 responses to this post.

  1. Posted by Tough Love on March 14, 2018 at 7:48 pm

    A Plan that has sufficient assets to pay out a lump sum that ………… “at plan termination to be in the mid-90% range of the plan’s total actuarial equivalent value of benefits.” ……….. assuming the lump sum payments are determined using the same mortality and 3–segment interest rates that Private Sector Plans must use, is certainly NOT in a financial conditions that calls for termination. In fact, it would be in BETTER shape than most Private Sector Plans (which are themselves almost TWICE as well funded as the average Public Sector Plan).

    Something is missing here, and the clue may be in the sentence ……..

    “However, diocese officials declined to clarify how payments would be determined.”

    They may be calculating the Lump Sums using mortality and interest rates that result in far lower lump sums than would be the case if ERISA/PPA-required rates were used.

    Reply

  2. Posted by skip3house on March 14, 2018 at 8:03 pm

    What else can be expected when trusting souls have faith in others doing complicated ‘arithmetic’ not understood by the average person?
    K.I.S.S. https://en.wikipedia.org/wiki/Lune_of_Hippocrates

    Reply

  3. Posted by readslikeamafiabook on March 14, 2018 at 10:11 pm

    If a man can call himself a woman, i.e, catleiny jenner or whatever he/she calling him/her self …can I call myself a public worker and claim pension? If not, why not?

    Reply

  4. Posted by Mike on March 15, 2018 at 8:49 am

    Hmm…will this shake employees’ faith in other, more celestial, promises announced in those parishes? Or is this action to be explained using some sort of “the owner of the grape fields changed his mind” parable?

    Reply

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