by Tom Gallagher
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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.
Church plans also don't have to tell employees how healthy their pension plans are, so bad news can come as a shock. That happened to Augsburg Fortress employees in January. The company sent letters to the 500 employees, former employees and retirees explaining that most would receive only a portion of their pensions, paid out in a check in March."
This is yet another example of how church and church-related entities are given favoritism by Congress for special exemptions that make little-to-no sense. Church and church-related entities in their capacities are fiduciaries of citizens-of-faith must be required to operate with full and mandatory disclosure without exemptions. Moreover, if churches and church-related entities truly cared about "their people," they would ask Congress to remove these exemptions, as common sense, stewardship and justice require that churches and church-related entities engage their employees in a forthright manner. Could you imagine a Wall Street firm operating like a church entity and getting away with it? (Hmmmm....maybe that's what Wall Street is doing.)
