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What is a church plan?
There are two types of church pension plans:
Plans established by a church or by a financial institution established by a church (often called a church pension board); and
Plans established by religiously-affiliated nonprofit hospitals, schools, and social services agencies that were originally protected by federal law but later received rulings from the Internal Revenue Service saying that they are church plans.
How can you tell if you are in a church plan?
If you are in a pension plan and your employer has a connection of any kind with a religious institution, it is worth checking to see if yours is a church plan.
Look at any booklets or other documents you have received about your benefits under the plan. If there is a statement that your pension is insured by the Pension Benefit Guaranty Corporation, your employer if probably not taking the position that yours is an unprotected church plan. But be sure that the documents are up-to-date since your employer may have gotten a church plan ruling after they were published.
Ask your personnel or HR department whether your pension would be protected if the plan ran out of money, and to show you a plan document that backs up the answer.
See if your plan has filed a financial statement with the government for your plan. These statements are called Form 5500s and are available on the Labor Department’s website. Church plans are not required to file these forms so if you can’t find one, you probably are not protected by federal law.
If you find a Form 5500 for your employer, make sure it is for the pension plan. Some employers file forms for their health and disability plans but not for their pensions.
What can you do to protect yourself if you are in a church plan?
If you are in church plan, you do not have a legal right to receive information about the financial status of your plan. If you are worried that the plan might run out of money – or if it already has stopped paying promised benefits or has reduced your pension – you should be sure to express your concerns. It is very important to communicate to plan officials (and to your employer or former employer) how important your benefits are to your financial security.
If you are in a plan that was established by a church or by a church pension board, it may be possible to persuade church officials that they have a moral obligation to make good on their promises to you. This can be done by forming a group to write letters and ask for meetings with church officials. If they are not responsive, the next step is to go to the media to gain the support of your community. This strategy can be very successful.
In addition, some retirees have brought lawsuits in state courts against the churches that established their plans claiming that the churches’ failure to make good on pension promises made to them is a breach of the church’s contract with them and a violation of the obligation of the people running the plan to act wisely, carefully, and solely in the retirees’ interests.
If you are in a plan where a church disclaims all financial responsibility for your pension because the plan was established by a hospital, school, or social services agency and not by the church, you may want to take the time to learn about the three dozen lawsuits that have challenged the legality of the Internal Revenue Service rulings that plans have relied on to claim that they are church plans exempt from federal law. The Pension Rights Center has information about these cases and has filed friend-of-the-court briefs in many of them. Our position is that the IRS rulings are not supported by the language or the history of the law.
In today’s challenging pension environment, our work is more important than ever. Your contribution will help make it possible for the Center to continue its crucial role as a national consumer organization committed protecting and promoting retirement security.