Author Topic: Perils of Church-Related Pensions  (Read 9975 times)

FatherWilliam57

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Re: Perils of Church-Related Pensions
« Reply #60 on: November 01, 2010, 09:52:34 AM »
Translation:  Because the only way to make this church (ELCA) "do the right thing" is to compell them to do so under secular law?  ??? ??? ???
The Rev. William B. Henry, Jr.
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Charles_Austin

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Re: Perils of Church-Related Pensions
« Reply #61 on: November 01, 2010, 09:57:35 AM »
Read more carefully, Pastor Henry, I do not know that in this situation the church has not "done the right thing." Wow! The assumptions fly around here like autumn leaves!
Oh, and before the howling begins, I do not contend without a doubt that the ELCA or Augsburg-Fortress has "done the right thing." My point is: We do not know. We do not have in our hands the information necessary for us to know. So the carping and wailing and accusations are inappropriate.
« Last Edit: November 01, 2010, 10:09:28 AM by Charles_Austin »

Scott6

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Re: Perils of Church-Related Pensions
« Reply #62 on: November 01, 2010, 10:24:30 AM »
Scott writes:
But in any case, the ELCA should not perpetrate injustice.  Proclaiming against the injustice of another while actually perpetrating it by being a party to it elsewhere has a quite simple name -- hypocrisy.

I comment:
Personally, I do not know enough about the situation to declare it "unjust." That requires some assumptions about what is going on that I am not qualified to make. And, as noted above, I don't think you know enough about the situation either.

Now, if your view of justice is that all retirees or all people should somehow receive a certain level of support at a certain time in their lives, you will want to expand the work of the LC-MS offices of governmental affairs.

It's certainly true that the legal verdict on whether or not they are acting justly is out, but the verdict on the morality of the issue is much closer at hand -- again, if you will spend millions to advocate for folks who are the victims of bad situations being placed upon them by others, and your own publishing house has canceled the pensions of hundreds of its employees, leaving many high and dry in their retirement, then it goes to reason that charity and a sense of fair play would use those funds to help pay the pensions of your publishing house's retirees.

Which is to say, we don't need a court to tell us what is moral or not.  Church folk are certainly capable of chiming in, though I agree that the church won't be the one to make the legal determination.

As to the "all people" receiving a certain level of financial support bit, that's a non sequitur as I was concerned with the pension plan to which AF employees contributed for many years, expecting to receive a pension.

In any case, if James Gale or Donald Kirchner would chime in on my argument above, I'd be interested in hearing their lawyerly opinions.
« Last Edit: November 01, 2010, 10:26:22 AM by Scott Yakimow »

FatherWilliam57

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Re: Perils of Church-Related Pensions
« Reply #63 on: November 01, 2010, 10:29:00 AM »
Oh, and before the howling begins, I do not contend without a doubt that the ELCA or Augsburg-Fortress has "done the right thing." My point is: We do not know. We do not have in our hands the information necessary for us to know. So the carping and wailing and accusations are inappropriate.

Oh, but we do know.  The ELCA released a statement shortly after the A-F Pension Fund "went south" stating that "this church" has no legal obligation to address the problem.  Nothing, as I recall, was said about any moral or ethical obligation we might have toward these men and women who served for the benefit of "this church."   Sounds a little "morally bankrupt" to me...but your mileage may vary.
« Last Edit: November 01, 2010, 10:33:25 AM by FatherWilliam57 »
The Rev. William B. Henry, Jr.
Interim Pastor, St. Peter's Lutheran Church, Evans City, PA
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Mike Bennett

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Re: Perils of Church-Related Pensions
« Reply #64 on: November 01, 2010, 11:02:00 AM »
Read more carefully, Pastor Henry, I do not know that in this situation the church has not "done the right thing." Wow! The assumptions fly around here like autumn leaves!
Oh, and before the howling begins, I do not contend without a doubt that the ELCA or Augsburg-Fortress has "done the right thing." My point is: We do not know. We do not have in our hands the information necessary for us to know. So the carping and wailing and accusations are inappropriate.

1. It is a matter of uncontroverted public record that
a. The AF employees had/have a defined benefit pension plan ("AF DB Plan")
b. A DB Plan includes a promise to its participants to pay them a pension based on the formula stated in the Plan
c. A DB Plan is overseen by its trustees and, unlike a defined contribution plan (401K or the non-profit equivalent) is completely outside the control of its participants
d. The AF DB Plan has become increasingly underfunded over the past several years, as employer contributions and investment returns were inadequate to fund the actuarially calculated value of pension benefits
e. AF has now explicitly advised its DB Plan participants that it cannot and therefore will not keep its promiss to them (b. above) and has reduced the payments in specific announced ways

On what planet is it unclear whether AF has "done the right thing" in breaking its promise to retirees and soon-to-be retirees, who have naively believed their employer's promise?

2. Like you and Scott, I am not a lawyer (though I can raise Scott's lawyer father by one lawyer brother and one lawyer nephew).  More to the point, I am trustee of a DB pension plan (in addition to several 401K plans).
a. Each year our actuary provides the DB plan trustees a report based on  its assets, pension formula, investment returns, and participant demographics that tell us the amount of employer contributions required in the following year to maintain a sound funding level.
b. As we are a for-profit company, we are subject to regulations established by the ERISA law, which, among other things, require a certain funded level and impose certain limitations on the plan if it fails to attain that level.
c. Following the 2008 investment market debacles, we were required to dig deeper than planned to maintain the required funded level for our DB Plan.  We did it.  That's what plan sponsors do.
d. Further, because the people of the United States became sick and tired of seeing pension plans break their promises to participants, we are required to pay an insurance premium to the Pension Benefit Guaranty Corporation ("PBGC") each year.  Should oru plan become insolvent and its sponsor (my employer) be unable to save it, the participant pensions are protected by PBGC.

So long as churches invest in the same world as for-profit organizations, there is no excuse for the continuation of a "church plan" exception from ERISA and PBGC coverage.

3.  For the present AF DB Plan human crisis (and it is a human crisis), the ELCA churchwide "expression" of church needs to step up and do what churches traditionally do in a financial emergency - make an emergency fund raising appeal to its 5 million (4 million? 3 million?) members, explaining exactly what's happened, the human suffering that's resulted, and promising that all proceeds from the emergency appeal will be added to the AF DB Plan investments, and the promised benefit levels restored to the participants.  My wife and I would respond as we traditionally do to true emergency appeals, and I am confident that enough other ELCA members would do the same that the crisis would be dealt with.  There is only one reason not to do this, and it has everything to do with establishing a bad legal precedent for ELCA, and nothing to do with right and wrong.

Try to refrain from references to "howling" "carping"  and "wailing," Charles.

Mike Bennett
« Last Edit: November 01, 2010, 11:04:42 AM by Mike Bennett »
“What peace can there be, so long as the many whoredoms and sorceries of your mother Jezebel continue?”  2 Kings 9:22

Mike Bennett

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Re: Perils of Church-Related Pensions
« Reply #65 on: November 01, 2010, 11:03:25 AM »
Translation:  Because the only way to make this church (ELCA) "do the right thing" is to compell them to do so under secular law?  ??? ??? ???

You have a problem with the peccator part of the simul?

Mike Bennett
“What peace can there be, so long as the many whoredoms and sorceries of your mother Jezebel continue?”  2 Kings 9:22

Brian Stoffregen

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Re: Perils of Church-Related Pensions
« Reply #66 on: November 01, 2010, 11:07:09 AM »
Personally, I do not know enough about the situation to declare it "unjust." That requires some assumptions about what is going on that I am not qualified to make. And, as noted above, I don't think you know enough about the situation either.

Now, if your view of justice is that all retirees or all people should somehow receive a certain level of support at a certain time in their lives, you will want to expand the work of the LC-MS offices of governmental affairs.

Is it unjust that none of the places where my wife has worked has given her pension?
« Last Edit: November 01, 2010, 11:11:59 AM by Brian Stoffregen »
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Mike Bennett

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Re: Perils of Church-Related Pensions
« Reply #67 on: November 01, 2010, 11:11:06 AM »
Personally, I do not know enough about the situation to declare it "unjust." That requires some assumptions about what is going on that I am not qualified to make. And, as noted above, I don't think you know enough about the situation either.

Now, if your view of justice is that all retirees or all people should somehow receive a certain level of support at a certain time in their lives, you will want to expand the work of the LC-MS offices of governmental affairs.

Is it unjust that none of the places where my wife has worked has given her pension?


But AF has a DB Plan, which includes promises to the participants as an integral part of being DB.  What part of "promise" is unclear, and how does "given" come into play?

From lawyers I might expect this (sorry Dad, sorry Roger, sorry Jason) (sorry Scott's dad) but from pastors?
“What peace can there be, so long as the many whoredoms and sorceries of your mother Jezebel continue?”  2 Kings 9:22

Michael Slusser

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Re: Perils of Church-Related Pensions
« Reply #68 on: November 01, 2010, 11:21:34 AM »
b. As we are a for-profit company, we are subject to regulations established by the ERISA law, which, among other things, require a certain funded level and impose certain limitations on the plan if it fails to attain that level.
c. Following the 2008 investment market debacles, we were required to dig deeper than planned to maintain the required funded level for our DB Plan.  We did it.  That's what plan sponsors do.
d. Further, because the people of the United States became sick and tired of seeing pension plans break their promises to participants, we are required to pay an insurance premium to the Pension Benefit Guaranty Corporation ("PBGC") each year.  Should oru plan become insolvent and its sponsor (my employer) be unable to save it, the participant pensions are protected by PBGC.

So long as churches invest in the same world as for-profit organizations, there is no excuse for the continuation of a "church plan" exception from ERISA and PBGC coverage.

Mike Bennett

Thank you, Mike, for a clear and sound analysis of the problem. If the AF employees were in a plan covered under ERISA, then the safeguards you list would protect them.

The point of the "church" plan exception, as I understand it, is that whereas corporations are come-and-go affairs, being wound up, taken over, merged, and so forth, ERISA was passed to make sure that their DB pension plans (if they had them) were not exploited by being drained of money for the profit of whichever owners might be in charge at a particular time. In the case of a recession such as the one we are in, a DB pension fund under ERISA has a few years, but only a few years, to get back up to fully funded status.

Churches, on the other hand, are expected to be there for the long pull, and therefore in theory always able to pay on their pensions out of current income, even if the fund in question is low; corporations were allowed to do that before ERISA, and many state governments (including--I'm told--Illinois still must appropriate pension money every year, because they refuse to fully fund their pension obligations; after all, that would RAISE TAXES, and we can't have that) still pay pensions as they go.

Still, even if the AR fund is under the "church plan" exemption, Charles is right that the details of the the Plan and its legal commection--or lack of connection--with the rest of the ELCA's corporate operations are what will determine whether the ELCA must bail out its publishing arm's pension plan by paying AR pensioners out of general church operating funds.

Peace,
Michael
Fr. Michael Slusser
Retired Roman Catholic priest and theologian

Jeremy Loesch

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Re: Perils of Church-Related Pensions
« Reply #69 on: November 01, 2010, 11:24:20 AM »
Brian, perhaps your wife should have looked elsewhere for work.  I cannot find in my handy pocket-edition of the US Constitution that a pension is guaranteed.  Was "life, liberty, and the happiness of pursuit" amended when I wasn't looking?  There is nothing just or unjust about pensions.  But when one is a DB (excellent summary BTW Mr. Bennett) then justice and injustice language is appropriate.

Jeremy
A Lutheran pastor growing into all sorts of things.

Mike Bennett

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Re: Perils of Church-Related Pensions
« Reply #70 on: November 01, 2010, 11:27:24 AM »

many state governments (including--I'm told--Illinois still must appropriate pension money every year, because they refuse to fully fund their pension obligations; after all, that would RAISE TAXES, and we can't have that) still pay pensions as they go.

Don't get me started. >:(

Mike Bennett
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“What peace can there be, so long as the many whoredoms and sorceries of your mother Jezebel continue?”  2 Kings 9:22

Michael Slusser

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Re: Perils of Church-Related Pensions
« Reply #71 on: November 01, 2010, 11:36:17 AM »

many state governments (including--I'm told--Illinois still must appropriate pension money every year, because they refuse to fully fund their pension obligations; after all, that would RAISE TAXES, and we can't have that) still pay pensions as they go.

Don't get me started. >:(

Mike Bennett
Fort Sheridan, Illinois

As the risk of getting you started: my Illinois relatives tell me that two Illinois state pension funds ARE fully funded (whatever it costs!), namely, the one for legislators and the one for judges.  >:(

Peace,
Michael
Fr. Michael Slusser
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Charles_Austin

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Re: Perils of Church-Related Pensions
« Reply #72 on: November 01, 2010, 11:48:20 AM »
Mike Bennett seems to have some special knowledge that can be useful in the discussion. Good. Our knowledge is still incomplete regarding this "church plan" exemption, and - as noted above - I don't believe any opinion begins to hold water until we have seen the exact documents and legal standing of this particular case.

We are also unaware of the longer-term consequences if Augsburg-Fortress or the ELCA would - out of our sheer graciousness and Christian compassion - say "oh, sorry. The plan can't pay you, but here's your money anyway, taken from funds that should have gone elsewhere." We do not know what kind of unintended consequence that might have or what it might mean the next time a pensioner is in need.

But, of course, this sad situation does give ELCA critics another chance to say how hypocritical and corrupt we are. Enjoy.

Mike Bennett

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Re: Perils of Church-Related Pensions
« Reply #73 on: November 01, 2010, 12:05:14 PM »

many state governments (including--I'm told--Illinois still must appropriate pension money every year, because they refuse to fully fund their pension obligations; after all, that would RAISE TAXES, and we can't have that) still pay pensions as they go.

Don't get me started. >:(

Mike Bennett
Fort Sheridan, Illinois

As the risk of getting you started: my Illinois relatives tell me that two Illinois state pension funds ARE fully funded (whatever it costs!), namely, the one for legislators and the one for judges.  >:(

Peace,
Michael

I did not know that.  I believe Illinois must have the worst state government of the 50, in pretty much every way I can think of.  Irresponsible operation of pension funds is only one of the many ways.  My party and the other one cooperate happily in the mess. I know there are some supposed competitors for worst state government, but I think we've got 'em licked.   Another chance to try to fix it tomorrow.   >:(

Mike Bennett
“What peace can there be, so long as the many whoredoms and sorceries of your mother Jezebel continue?”  2 Kings 9:22

Mike Bennett

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Re: Perils of Church-Related Pensions
« Reply #74 on: November 01, 2010, 12:19:52 PM »
Mike Bennett seems to have some special knowledge that can be useful in the discussion. Good. Our knowledge is still incomplete regarding this "church plan" exemption, and - as noted above - I don't believe any opinion begins to hold water until we have seen the exact documents and legal standing of this particular case.

We are also unaware of the longer-term consequences if Augsburg-Fortress or the ELCA would - out of our sheer graciousness and Christian compassion - say "oh, sorry. The plan can't pay you, but here's your money anyway, taken from funds that should have gone elsewhere." We do not know what kind of unintended consequence that might have or what it might mean the next time a pensioner is in need.

But, of course, this sad situation does give ELCA critics another chance to say how hypocritical and corrupt we are. Enjoy.

1. "if Augsburg-Fortress or the ELCA would - out of sheer graciousness and Christian compassion . . . . . "

Charles, since you evidently believe some kind of "special knowledge" is required to read English, read my lips instead.  This is an AF Defined Benefit Pension Plan.  The Defined Benefit is a promise.  AF is the party making the promise.  Keeping a promise doesn't require sheer graciousness and Christian compassion.  It only requires integrity.

2. "another chance to say how hypocritical and corrupt we are."

As I'm a part of ELCA, "We" includes me.  And yeah, we're hypocritical and corrupt.  You're another one with a problem with the peccator part of the simul?  I've never been to seminary, and I get it.

3. "Enjoy."

Not hardly.  But I am willing to call a thing what it is, and AF has broken its promise to long-time employees, while ELCA stands to one side resting on its lack of legal liability.  It's scandalous.

Mike Bennett
“What peace can there be, so long as the many whoredoms and sorceries of your mother Jezebel continue?”  2 Kings 9:22