Today's Wall Street Journal has an important article on how church-related pensions can fail miserably, shut down and leave its participants out in the cold.
"Pensions are protected by federal law, which requires employers to fund the benefits, and insure their pensions with the Pension Benefit Guaranty Corp., which ensures their pensions will be paid even if the pension plan fails and the employer files for bankruptcy.
But when the law was enacted in the 1970s, churches were exempt unless they opted in. In the 1980s, the IRS definition of "church plan" widened to include almost any organization affiliated with a religious group. That includes recreational groups, hospitals and schools, and publishers like Augsburg Fortress.
Now, a number of church plans are struggling in the wake of investment losses. How many is difficult to say. Church plans don't have to file annual reports with the Internal Revenue Service disclosing their pension obligations, assets and investment managers, among other details.