At Least One Million Retirees from Religious Organizations Could Face Reduced or Zero Pension Benefits

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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.

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.

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.

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SOURCE: Christian Post, Leonardo Blair