This past weekend I came across a very pertinent news story in the New York Times about the retirement plans of public school teachers and any other humanitarian or religious employees who are enrolled in work-related pension plans. I know that many Café readers are employed in parishes, and thus fall under the pension plans of their respective dioceses, if one is offered in the benefits package.
The Times story stresses that we need to understand whether our pensions are 401(k) plans or 403(b) plans. I draw a modest pension from my diocese and I found that I am in the latter. It is important to know that the 403’s operate under less stringent federal guidelines, and as a rule can be less productive and harder to navigate than 401’s. If you start to read this Times piece, and you have trouble comprehending the details, this is probably a good indication that you need an independent advisor assisting you in your retirement planning.
Catholic dioceses are not exempt from fiscal catastrophes. At least a dozen in our country have filed for bankruptcy. Depending upon how the diocese is corporately structured, this may or may not impact upon the pensions of current or past employees. Catholic institutions can be sold to new entities which are not responsible for shortfalls or failed obligations in the pension pool, as happened in Passaic, New Jersey, at St. Mary’s Hospital in 2013.
Although one may be an employee in the church for an entire career, this is no guarantee that your pension will arrive to you intact. It is important that you control your own estate and have your present church pension plan reviewed by an independent advisor working on your behalf. Churches, incidentally, are not bound to full disclosure of a plan’s solvency.
Most dioceses are financially strapped and thus not employing the best internal financial officers or pension managers. The oversight of your plan is a critical issue and some form of diocesan structure needs to be in place to maintain accountability with employees. Consulting with your own advisor will help you to ask the important questions of diocesan officials.