What are the types of church pension plans?
There are many kinds of church pension plans. Some are the types of plans Congress intended to exempt from the law. Others are not.
This fact sheet describes the types of pension plans that claim to be church plans. The Pension Rights Center takes the position that there are only two types of church plans. These are:
- A plan that is established and maintained by a church
- A plan that is maintained by a church pension board
There are other types of plans that were neither established by a church nor maintained by a church pension board that say they are church plans. These include:
- A plan established by a nonprofit organization which is affiliated (or claims to be affiliated) with a church that claims it has always been a church plan
- A plan established by a nonprofit organization which is affiliated with a church that operated its plan under federal law in the past but now has applied to be treated as a church plan
- A plan established by a nonprofit organization which had no religious affiliation that operated its plan under federal law but then affiliated with a church and claimed that its pension plan was a church plan
Lay Employees of the Catholic Diocese of Wilmington Pension Plan: The Catholic Diocese of Wilmington filed for bankruptcy in 2009 as a result of lawsuits involving clergy sexual abuse. The Diocese’s pension plan for lay employees was severely underfunded. (Estimates are that it only had 9 to 13 percent of the money needed to pay all promised benefits). This means that workers and retirees were likely to get only a tiny fraction of the retirement benefits that they earned. Lay employees of the parochial schools, cemeteries, etc., only discovered that their pension plan was underfunded through bankruptcy filings. In July 2012, after the employees organized, filed a lawsuit, and received national media coverage, the Catholic Diocese of Wilmington announced a settlement that would fully fund the pension plan by the year 2060. Because the church had established the plan, the employees were able to persuade it to stand behind the plan.
The ELCA Retirement Plan, Minneapolis, MN: The ELCA Retirement Plan, Minneapolis, MN: The ELCA Retirement Plan is maintained by the Evangelical Lutheran Church in America Board of Pensions, which is not a church, but a financial organization that maintains retirement and health benefit plans for employees of the Evangelical Lutheran Church in America and nonprofit employers associated with ECLA. When the ECLA plan became seriously underfunded as a result of a downturn in the market, the Board of Pensions was able to persuade the church, which had created the Board, and the other contributing employers to put more money in the pension plan rather than terminating it and reducing the pensions of current and future retirees. The ECLA Board of Pensions is one of more than 45 “church pension boards” (now called “church benefits boards” because they also maintain health insurance plans.)
A plan established by a nonprofit organization which is affiliated (or claims to be affiliated) with a church that claims it has always been a church plan
Augsburg Fortress Publishers Pension Plan, Minneapolis, MN: Augsburg Fortress Publishers Pension Plan, Minneapolis, MN: Augsburg Fortress Publishers, the publishing house of the Evangelical Lutheran Church in America (ELCA), established and maintained its own pension plan for its employees. Augsburg Fortress took the position that because it was associated with the ELCA, the plan was a church plan and, therefore, did not have to follow the funding or other requirements of the federal pension law. By 2010, the plan only had enough money to pay one third of the benefits promised to the employees and retirees. Augsburg Fortress terminated the plan, and distributed small lump sum payments to participants, representing a only small fraction of the benefits they had earned. The employees filed a lawsuit, which was settled in April 2013. Under the settlement, the employees and retirees will receive more of their earned benefits.
A plan established by a nonprofit organization which is affiliated with a church that operated its plan under federal law in the past but now has applied to be treated as a church plan
St. Peter’s Medical Center Retirement Plan, New Brunswick, NJ: St. Peter’s Medical Center Retirement Plan, New Brunswick, NJ: Saint Peter’s Medical Center established and maintained its own pension plan for its employees. Throughout its existence, the plan had told participants that it was an ERISA plan and that was paying insurance premiums to the Pension Benefit Guaranty Corporation to protect their pension benefits. However, the hospital has now taken the position that it is a church plan and has asked the Internal Revenue Service to grant it “church plan” status. The hospital says that because it is associated with the church, its plan has always been a church plan even though it paid PBGC premiums and treated its plan as an ERISA plan. The IRS has not yet indicated whether it will grant the hospital’s request for a ruling.
A plan established by a nonprofit organization which had no religious affiliation that operated its plan under federal law but then affiliated with a church and claimed that its pension plan was a church plan
Employees Improved Retirement Plan at the Hospital Center at Orange, NJ: For decades, the Hospital Center at Orange had a pension plan that was covered by ERISA. Then, in 1998, the hospital affiliated with Cathedral Health Systems. Four years later the hospital applied for and received a ruling from the IRS that allowed it to “convert” its seriously underfunded ERISA plan to a church plan the following year. When the hospital shut down in 2004, the employees and retirees were told that they were no longer protected by the federal pension insurance program. The plan had only enough money to pay nine months of benefits when on March 28, 2013, the Internal Revenue Service agreed to revoke the church plan ruling that had been issued to the plan ten years earlier. The Pension Benefit Guaranty Corporation restored insurance protection to the plan on April 30, 2013.
Learn more about church plans by reading these fact sheets:
- The facts about church pension plans
- What is a “church pension plan”?
- Why does it matter if a pension plan is a church plan?
- Why are church pension plans not covered by federal laws?
- The legislative history of church pension plans
- What can be done to protect employees in church pension plans?
- Workers covered by church pension plans tell their stories
Looking for help with your retirement plan?
If you have a problem with your retirement plan, free help may be available from the U.S. Administration on Aging's network of Pension Counseling and Information Projects. Find help now.
Roadmap to retirement
Let our roadmap to helpful information about retirement plans for private-sector workers put you on the path toward a secure retirement. Get started.
PensionHelp America connects people who need help with their pension, 401(k), and other retirement plans with the pension counseling projects, legal services providers, and government agencies that can help answer their questions. Visit www.pensionhelp.org.
Get E-mail Updates
Retirement USA is a national initiative that is working for a new retirement system that, along with Social Security, will provide universal, secure, and adequate income for future retirees. Visit the website.
Did You Know?
Individual Retirement Accounts, or IRAs, are private accounts that allow individuals to save for retirement. Each type of IRA is governed by a unique set of rules that offer different tax benefits. Read our IRA fact sheets to learn about the different types of IRAs.