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 church plans and provides details of the ways these plans have left countless employees without the retirement security they had expected throughout their working lives.

• A plan that is established and maintained by a church
• A plan that is maintained by a church pension board
• A plan affiliated with a church that says it has always been a church plan
• A plan that was always affiliated with a church that has only recently applied to become treated as a church plan
• A plan that newly affiliated with a church and then claimed church plan status

A plan that is established and maintained by a church

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 is severely underfunded. (Estimates are that it only has 9 to 13 percent of the money needed to pay all promised benefits). This means that workers and retirees are 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 2011, the Catholic Diocese of Wilmington announced a settlement that would fully fund the pension plan by the year 2060.

A plan that is maintained by a church pension board

The ELCA Retirement Plan: The ELCA Retirement Plan is maintained by the Evangelical Lutheran Church in America Board of Pensions (ELCA BOP).  The ELCA BOP is not a church, but it is an organization that mainly maintains retirement and health benefits for employees of ELCA and its associated employers. 

A plan affiliated with a church that says it has always been a church plan

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.

A plan that was always affiliated with a church that has only recently applied to become treated as a church plan

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, it had told participants and retirees that it was an ERISA plan and that it has been paying insurance premiums to the Pension Benefit Guarantee Corporation to protect the pension benefits of its participants and retirees. However, recently, the hospital has 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 they are 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 granted the hospital’s request for a ruling. 

A plan that is newly affiliated with a church and then claimed church plan status

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 and “converted” its seriously underfunded ERISA plan to a church plan. When the hospital shut down the next year, the employees and retirees were told that they were no longer protected by the federal pension insurance program. The plan currently has only enough money to pay three years of benefits. 

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