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Pension Rights Center Statement on Saint Peter's Healthcare System "Church Plan" Ruling from the IRS

For Immediate ReleaseContact: Nancy Hwa, 202-296-3776
August 27, 2013www.pensionrights.org
Pension Rights Center Statement on Saint Peter's "Church Plan" Ruling

WASHINGTON – Last week, Saint Peter's University Hospital employees and retirees were notified that the Internal Revenue Service had issued a Private Letter Ruling saying that their pension plan is a “church plan.” If allowed to stand, the ruling will mean that the pension plan will no longer be protected by ERISA (the Employee Retirement Income Security Act, the nation’s landmark pension law), or be backed by the Pension Benefit Guaranty Corporation, which insures most private pension plans. Since the plan is significantly underfunded, the decision jeopardizes the retirement security of everyone in the plan. Church plans do not have to follow federal funding rules and the plans can be stopped at any time, paying participants only the money that is left in the plan.

Below is a statement from Karen Ferguson, director of the Pension Rights Center, which is helping workers and retirees from Saint Peter’s and other religiously-affiliated employers fight efforts to change their ERISA plans to church plans:

We are deeply disappointed that the IRS appears to have issued a church plan ruling to Saint Peter’s Healthcare System (formerly Saint Peter’s University Hospital). The ruling is particularly disappointing since many Saint Peter’s participants had filed comments documenting that their pension plan has been an ERISA plan since January 1, 1974, and had specifically requested the opportunity "to participate in the decision-making procedure by making oral presentations" at an IRS meeting as contemplated by Revenue Procedure 2011-44. No meeting was ever held.

In addition, the private letter ruling (PLR) was issued while litigation is pending that challenges Saint Peter’s contention that it is a church plan.

The IRS has not released the PLR to the public, and is not likely to do so for 90 days. This makes it impossible for the participants or their advocates to challenge the assertions made by Saint Peter’s in its ruling request (submitted under penalty of perjury) or the rationale provided by the IRS.

If the IRS rationale turns out to be similar to that in the most recently issued PLR (PLR 201333024 issued to a religiously-affiliated university for its defined contribution plan), it will reflect a longstanding misreading of the law by the agency.

It will now be for the courts and Congress to determine whether the IRS should be allowed to continue to allow retirement plans that have been ERISA plans for decades to convert to church plan status solely for the purpose of saving money at the expense of the retirement security of their current and former employees.

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