Employees and retirees of New Jersey's St. Peter's Healthcare System have received notice from the IRS informing them their pension plan was now considered a "church plan."
Should the ruling stand, it would remove St. Peter's pension from Employee Retirement Income Security Act protection and Pension Benefit Guaranty Corp. backing.
Because the plan is significantly underfunded, the decision jeopardizes the retirement security of everyone in the plan.
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St. Peter's Healthcare System announced in November 2012 that the pension had been switched to a "church plan," but the Pension Rights Center asserts that the pension was PBGC-insured and ERISA-compliant between 1974 and 2006.
Defining a pension as a "church plan" means employers need not adhere to the funding and insurance requirements of ERISA. It's a small loophole in the private retirement regulations that some healthcare systems with religious affiliations are enlisting. According to the IRS, in order to qualify, a church plan must have been established and maintained by the church's employees and affiliated employees.
The St. Peter's ruling came despite pending litigation. The Pension Rights Center released a statement expressing its disappointment with the decision.
"The ruling is particularly disappointing," it said, "since many Saint Peter's participants had filed comments documenting that their pension plan has been an ERISA plan since Jan. 1, 1974, and had specifically requested the opportunity 'to participate in the decision-making procedure by making oral presentations' at an IRS meeting. … No meeting was ever held."
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