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U.S. Supreme Court’s “church plan” decision leaves key issue undecided

For Immediate ReleaseContact: Joellen Leavelle, 202-296-3776
June 05, 2017www.pensionrights.org

WASHINGTON – The U.S. Supreme Court ruled today that pension plans with ties to religious organizations may not have to comply with federal pension law. Today’s ruling leaves it to lower courts to decide whether hundreds of thousands of people who thought they were guaranteed federal protections will receive the pensions they earned.

“Today’s ruling is not a win, but it isn’t a loss, either,” said Karen Ferguson, director of the Pension Rights Center. “The Court merely ruled that a religiously-affiliated entity can establish a “church plan” that is exempt from federal pension law. However, the Court noted that its ruling did not address a second requirement of the law, that an exempt church plan be maintained by an “organization” that has administration of the plan as its principal purpose.

The hospitals in the cases heard by the Court take the position that a pension plan’s internal retirement committee is the “organization” contemplated by the federal pension law. The employees contend that the term "organization" was only meant to exempt plans maintained by “church pension boards,” which are financial institutions created by churches to maintain their plans.

In its opinion, the Court pointed out that this issue and a second issue were not before it, and nothing said in the opinion “expresses a view of how they should be resolved.”  The retirement security of hundreds of thousands of current and former employees of religiously-affiliated hospitals, schools, and social services agencies remains in limbo until these issues are addressed.

When it was enacted in 1974, the Employee Retirement Income Security Act exempted pension plans that were established and maintained by churches for their own employees. These “church plans” did not have to comply with the funding, disclosure, reporting and other provisions of the pension law.  In 1980, Congress expanded the church plan exemption to enable plans established by churches to cover employees of affiliated hospitals, schools and other nonprofit organizations. The amendment also allowed certain religiously-affiliated organizations to maintain plans. 

“The Court addressed only one issue: That a pension plan can be a church plan even if it is not established by a church,” said Ferguson. “The Court did not decide whether the plans involved in the cases before it are maintained by the type of organization envisioned  by Congress when it enacted the law. That this was not addressed in the Court’s decision leaves hope for workers and retirees covered by these plans that they will receive the pensions they earned.” 

The Supreme Court’s decision is Advocate Health Care Network v. Stapleton. Two other cases were also included in the Court's opinion, Saint Peter's Healthcare System v. Kaplan and Dignity Health v. Rollins, (Nos. 16-74, 16-86, 16-258) June 5, 2017 581 U.S. _(2017).

 

 

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