Author Topic: Perils of Church-Related Pensions  (Read 10221 times)

Scott6

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Perils of Church-Related Pensions
« on: April 22, 2010, 11:47:50 AM »
Perils of Church-Related Pensions

Employees and retirees of Minneapolis publisher Augsburg Fortress are suing their employer, alleging in their complaint that it allowed their pension plan to fail, and used its connection to the Lutheran church as a legal shield to avoid paying them all their pensions.

<snip>

The publisher had asked the church for help, but "the church-wide organization advised us that it had no obligations or fiduciary duties" to do so, Ms. Lewis noted.

"I'm disappointed that the church hasn't felt more responsibility for this," said Mr. Lipscomb. "If the basis for a church plan is the company's relationship to the church, is it reasonable that the church can feel no responsibility for what its publisher is doing?"

Augsburg Fortress is a separately incorporated unit under the ELCA church wide organization. "The church-wide organization had no role in the creation, management or termination of that plan. That was Augsburg Fortress and its Board of Trustees decision," said John Brooks, a spokesman for the Evangelical Lutheran Church of America.

The suit alleges that the pension at Augsburg Fortress wasn't a church plan, but falls under the federal pension law because it promised pensions to its employees. The complaint claims that the employer violated its fiduciary duty by allowing the plan to become underfunded, and by failing to warn participants of the plans poor condition. And even if it is deemed to be a church plan, it failed its state-law duties to prudently manage the plans and its assets, the suit argues.


Find it here.

Team Hesse

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Re: Perils of Church-Related Pensions
« Reply #1 on: April 22, 2010, 11:58:32 AM »
It's either a "church pension plan" (shielding them from certain disclosure laws, apparently) or it's not (so they are required to fund the full benefits).   The ELCA, by claiming not to be in any way responsible, has hung AF out to dry -- if the church disavows any involvement in what happens at Augsburg Fortress (even though AF is an incorporated unit "under" the ELCA church wide organization), how can it have been a "church plan"?  So the grounds for the suit might be valid -- they used the church exemption to dodge the law, albeit probably unintentionally.  
The AF employees are suing Augsburg Fortress -- I wonder if AF will turn around and sue the ELCA for misleading them into thinking they were part of the church?
Debbie

Charles_Austin

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Re: Perils of Church-Related Pensions
« Reply #2 on: April 22, 2010, 03:14:03 PM »
More scare tactics. There was no misleading. Let's remember that saying the publishing house is a "part" of the church is quite different from making church responsible for the finances of a body incorporated in another way.
But, of course, why pass up an opportunity to posit some more trouble for the ELCA, even if in fantasy-land?

dkeener

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Re: Perils of Church-Related Pensions
« Reply #3 on: April 22, 2010, 03:32:42 PM »
More scare tactics. There was no misleading. Let's remember that saying the publishing house is a "part" of the church is quite different from making church responsible for the finances of a body incorporated in another way.
But, of course, why pass up an opportunity to posit some more trouble for the ELCA, even if in fantasy-land?

The legal stuff aside it is the "no obligation" stance of the ELCA that I find offensive.  What about the moral one?

Brian Stoffregen

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Re: Perils of Church-Related Pensions
« Reply #4 on: April 22, 2010, 05:52:59 PM »
More scare tactics. There was no misleading. Let's remember that saying the publishing house is a "part" of the church is quite different from making church responsible for the finances of a body incorporated in another way.
But, of course, why pass up an opportunity to posit some more trouble for the ELCA, even if in fantasy-land?

The legal stuff aside it is the "no obligation" stance of the ELCA that I find offensive.  What about the moral one?

When the ELCA congregation I served was four months behind on their mortgage payments (and being threatened with foreclosure) and over a year behind on my car allowances, did the churchwide offices have a moral obligation to make up the arrears?
"The church had made us like ill-taught piano students; we play our songs, but we never really hear them, because our main concern is not to make music, but but to avoid some flub that will get us in dutch." [Robert Capon, _Between Noon and Three_, p. 148]

James Gustafson

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Re: Perils of Church-Related Pensions
« Reply #5 on: April 22, 2010, 09:28:00 PM »
I think the real danger here is not that the ELCA will have to fund the pension, but rather, that the legal suit would win on the grounds that the AF doesn't have the right to exist without paying off it's legal obligations.  The assets of AF could be foreclosed and sold off piecemeal to pay back the pension fund by court order.  Forced bankruptcy and the last 200 employees would be out of work and the ELCA would be out of a publisher.
« Last Edit: April 22, 2010, 09:31:15 PM by James Gustafson »

jrubyaz

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Re: Perils of Church-Related Pensions
« Reply #6 on: April 23, 2010, 12:26:16 AM »
Brian,

Your usual red herring in tossed in here. A parish and a pastor having a financial agreement is far different than this situation. If the church falls on hard times, through  (hopefully) mutual consent situations can be worked out.  That is not unlike companies in the current recession trimming pay or telling their employees there are cutbacks, which most find better than no job at all.

That is far different than a pension being cut or completely eliminated after paying into it for years. THe better analogy is BOP coming to you and telling you all your pension is gone, won't be paid. Legally, they have a leg to stand on as our pensions are not guaranteed by the FDIC or anyone else. Morally, it would be reprehensible.

For a church that lectures on economic justice in every press release possible, it is blatant hypocrisy.

I wonder if the BOP could also go under. It is evidently a discussion point for some leaving the ELCA that they do not want their funds to remain even though it is possible to do so.

More scare tactics. There was no misleading. Let's remember that saying the publishing house is a "part" of the church is quite different from making church responsible for the finances of a body incorporated in another way.
But, of course, why pass up an opportunity to posit some more trouble for the ELCA, even if in fantasy-land?

The legal stuff aside it is the "no obligation" stance of the ELCA that I find offensive.  What about the moral one?

When the ELCA congregation I served was four months behind on their mortgage payments (and being threatened with foreclosure) and over a year behind on my car allowances, did the churchwide offices have a moral obligation to make up the arrears?

George Erdner

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Re: Perils of Church-Related Pensions
« Reply #7 on: April 23, 2010, 12:36:44 AM »
More scare tactics. There was no misleading. Let's remember that saying the publishing house is a "part" of the church is quite different from making church responsible for the finances of a body incorporated in another way.
But, of course, why pass up an opportunity to posit some more trouble for the ELCA, even if in fantasy-land?

The legal stuff aside it is the "no obligation" stance of the ELCA that I find offensive.  What about the moral one?

When the ELCA congregation I served was four months behind on their mortgage payments (and being threatened with foreclosure) and over a year behind on my car allowances, did the churchwide offices have a moral obligation to make up the arrears?

That would depend on if the congregation's problems were the result of the national church's actions, or if they were the result of you not being a very effective pastor. If you were doing an outstanding job of evangelism and educating the congregation on stewardship, but the national church launched a new mission congregation only a few miles away that took a big chunk of your congregation's members, I'd say that HQ might have a moral obligation. But, if you preached antinomianism in your sermons, did minimal outreach, refused to engage in stewardship programs, and otherwise caused the problems, then HQ wouldn't have an obligation.

Are AF's woes the result of decisions made in Chicago, or are they the result of mismanagement on AF's part?

Steven Tibbetts

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Re: Perils of Church-Related Pensions
« Reply #8 on: April 23, 2010, 02:03:22 PM »

I wonder if the BOP could also go under. It is evidently a discussion point for some leaving the ELCA that they do not want their funds to remain even though it is possible to do so.


Remember, the AFP pension plan that was closed down was a defined benefit plan, that is, the plan was obligated to pay pensioners a particular amount, regardless of what the retiree or company paid into it.  This is the same kind of pension plan that has been driving major corporations into bankruptcy for 30 years, and is now doing the same with states, cities, etc. 

The ELCA-BOP pension plan is what was once called a "defined contribution" plan.  Some of you compensation is set aside today to be paid out after retirement.  BOP manages how that money is invested, but promises only to invest according to the "Prudent Man Rule," not how much you will actually get at the other end.  If you and they plan well, you run out of life before you run out of money. 

The ELCA's response should be to establish something like the ELCA Special Needs Retirement Fund for the employees and retirees of the church's publishing ministry, and have a churchwide offering specifically for that purpose.

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Brian Stoffregen

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Re: Perils of Church-Related Pensions
« Reply #9 on: April 23, 2010, 02:53:25 PM »
That would depend on if the congregation's problems were the result of the national church's actions, or if they were the result of you not being a very effective pastor. If you were doing an outstanding job of evangelism and educating the congregation on stewardship, but the national church launched a new mission congregation only a few miles away that took a big chunk of your congregation's members, I'd say that HQ might have a moral obligation. But, if you preached antinomianism in your sermons, did minimal outreach, refused to engage in stewardship programs, and otherwise caused the problems, then HQ wouldn't have an obligation.

The major issue with that congregation was the declining population in the area. Our sons' grade school was one of four (if I remember right) that were closed due to declining population. Our neighbor -- a long-time employee at the high school -- stated that there population was the lowest she had seen in 20 years. Like with a number of issues today -- the problems were caused by a major decline in the economy. (That area often went through boom/bust cycles.)
"The church had made us like ill-taught piano students; we play our songs, but we never really hear them, because our main concern is not to make music, but but to avoid some flub that will get us in dutch." [Robert Capon, _Between Noon and Three_, p. 148]

edoughty

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Re: Perils of Church-Related Pensions
« Reply #10 on: April 23, 2010, 03:11:34 PM »

I wonder if the BOP could also go under. It is evidently a discussion point for some leaving the ELCA that they do not want their funds to remain even though it is possible to do so.


The ELCA's response should be to establish something like the ELCA Special Needs Retirement Fund for the employees and retirees of the church's publishing ministry, and have a churchwide offering specifically for that purpose.


Agreed. 

George Erdner

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Re: Perils of Church-Related Pensions
« Reply #11 on: April 23, 2010, 05:41:39 PM »
That would depend on if the congregation's problems were the result of the national church's actions, or if they were the result of you not being a very effective pastor. If you were doing an outstanding job of evangelism and educating the congregation on stewardship, but the national church launched a new mission congregation only a few miles away that took a big chunk of your congregation's members, I'd say that HQ might have a moral obligation. But, if you preached antinomianism in your sermons, did minimal outreach, refused to engage in stewardship programs, and otherwise caused the problems, then HQ wouldn't have an obligation.

The major issue with that congregation was the declining population in the area. Our sons' grade school was one of four (if I remember right) that were closed due to declining population. Our neighbor -- a long-time employee at the high school -- stated that there population was the lowest she had seen in 20 years. Like with a number of issues today -- the problems were caused by a major decline in the economy. (That area often went through boom/bust cycles.)

So, are you saying that it wasn't your fault, but it wasn't the fault of Higgins Road either?

Brian Stoffregen

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Re: Perils of Church-Related Pensions
« Reply #12 on: April 23, 2010, 09:32:43 PM »
That would depend on if the congregation's problems were the result of the national church's actions, or if they were the result of you not being a very effective pastor. If you were doing an outstanding job of evangelism and educating the congregation on stewardship, but the national church launched a new mission congregation only a few miles away that took a big chunk of your congregation's members, I'd say that HQ might have a moral obligation. But, if you preached antinomianism in your sermons, did minimal outreach, refused to engage in stewardship programs, and otherwise caused the problems, then HQ wouldn't have an obligation.

The major issue with that congregation was the declining population in the area. Our sons' grade school was one of four (if I remember right) that were closed due to declining population. Our neighbor -- a long-time employee at the high school -- stated that there population was the lowest she had seen in 20 years. Like with a number of issues today -- the problems were caused by a major decline in the economy. (That area often went through boom/bust cycles.)

So, are you saying that it wasn't your fault, but it wasn't the fault of Higgins Road either?

Do we consider the economic crash to be an act of God?
"The church had made us like ill-taught piano students; we play our songs, but we never really hear them, because our main concern is not to make music, but but to avoid some flub that will get us in dutch." [Robert Capon, _Between Noon and Three_, p. 148]

J. Thomas Shelley

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Re: Perils of Church-Related Pensions
« Reply #13 on: April 23, 2010, 09:50:02 PM »

Do we consider the economic crash to be an act of God?

No, I consider it to be an act of human hubris ("too big to fail") and, ultimately, sinfulness.
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revklak

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Re: Perils of Church-Related Pensions
« Reply #14 on: April 23, 2010, 10:00:23 PM »
It's interesting that last weekend two of us in the TX-LA Gulf Coast synod brough forht a resorlution (written elsewhere in the ELCA) to memorialzie the Church Council to take certain steps to help alleviate both the AF pension scandal and the BoP cut in benefits to retirees.  it included 4 resolves - to sell the Churchiwde office buiding and move to  more suitable digs, to close all LOGA fucntions and offices, to cut travel budtes and travel outside US except for those lving and owkring (in hindisht, I think that one could have been clearer to make a distinction between "working" and "sending representatives to Climat Conference in Copenhagen) - and all savings was to be given to AF and BoP to help, at least somewhat, the suffering.

Schwartling with the churchiwde rep at our assembly.  He outright attacked the selling of the buidling, saying the Chircago market makes it impossible to do so.  (Like any marekt is good; Gulf Coast did just that - well, not selling but moving to more modest accomodations to accompany their shrinking staff).  LOGA closing was also dramaticzlly attacked, most notably by our ELM 17 poster child in our syond.  Interestingly enough, the refernce and counsel committee had spent several weeks trying to convince us to withdraw our resolution, on variios points, including another resolution they knew was coming that was similar but didin't address ALL our concerns.  We said no, present it as is.  Well, they recommended defeat, of course, and it was.  As soon as it was defeated, they moved the last resolution up, which we were told was drafted by none other than Schwartling himself... I could be mistaken, but the langrage was VERY lawyerly.  It called for some such encouragement to the BoP to look to reinstate their funds, and to ask the Church Council to look at ways it might help.  (All talk.  The other, at least, had suggestions.  I'm not saying I thought it had a chance, but at least we got conversation on whats goin on onto the assembly floor).


Seems to be the Church Wide posiditon -- we're concerned, we'll encourage, but don't ask us to get involved, feel responsible, etc.  No wonder they were so hot and heavy to keep saying last week that AF is an entirely separate entity and we should in no way even SUGGEST how they should work their pension.  I think it was CYA all the way!