AARP Foundation takes on hospital, church over worker pensions
"For some of them, it was all of the money that they were expecting for their retirement, and they were promised it over and over.”
Faith may be a powerful force, but it’s not paying the bills for Catholic hospital workers who have been told that their pensions are gone.
NPR reports that workers at St. Clare’s Hospital in Schenectady, NY, were stunned to be told that its pension fund had collapsed after the hospital, says the report, had run “into financial problems and in 2008 it was folded into a larger hospital system.”
After initially being told that there was nothing to worry about concerning their pensions, more than 600 workers now find themselves cut adrift just when they need the money most. Some older workers were offered reduced pensions, but for the 600+ workers at the heart of the issue, there’s nothing on offer.
And the AARP Foundation has filed a lawsuit against the Roman Catholic Diocese of Albany and the pension fund’s board of trustees on behalf of the workers.
Many religious groups are taking advantage of a loophole in the laws that protect pensions but allow religious organizations to opt out. They can avoid paying into the government insurance program that protects workers’ pensions in the event the organization runs into trouble—and that’s just what St. Clare’s did.
Not only did it not pay into the insurance program, says the report, it also chose not to comply with “other federal rules aimed at making sure pensions are adequately funded and insured.”
The report quotes Dara Smith, an attorney with the AARP Foundation, saying, “It’s incredibly devastating. These folks were relying on this money for their retirements. For some of them, it was all of the money that they were expecting for their retirement, and they were promised it over and over.”
Smith also points out in the report that a 2017 Supreme Court decision made it easier for religious groups to opt out.
According to the report, “The legal team that argued that case estimated that about 1 million people have pensions from religious organizations that have opted out of the federal guarantee program.”
And while Smith says it’s difficult to say with certainty how many of those plans are in trouble—since some “church plans” do get insurance from other sources—there are other lawsuits pending against pension funds that have no such coverage. Smith identified Rhode Island, New Jersey, Minnesota and Puerto Rico as sites of such litigation.
According to the AARP suit, St. Clare’s may have had an exemption from paying into the guarantee program, but since it has failed to provide pensions to workers, it has violated state law.
Smith says in the report that even if religious groups take advantage of exemptions, they can’t just abandon the people who work for them. She’s quoted saying, “This is really a new wave of lawsuits finding a way to make sure that they can be held accountable.”
According to NPR, the Diocese of Albany “declined to be interviewed because of the litigation. It said in a statement that it knows people are suffering but that the diocese ‘never managed the St. Clare’s pension fund. St. Clare’s is a separate corporation.’”
However, Victoria Esposito, a legal aid attorney working with AARP on the St. Clare’s case, says in the report that the Roman Catholic Diocese of Albany “is responsible for making these people whole and paying their pensions.”
Esposito adds, “This hospital was run by the Catholic Church, more specifically the Diocese of Albany, and the Diocese of Albany is responsible for making these people whole and paying their pensions.”
Since the diocese itself isn’t bankrupt, despite payouts over church sex abuse scandals, the hospital workers’ lawyers are hopeful that the suit will succeed in resurrecting workers’ pensions.
Considering the number of people nationwide who could be affected by the outcome of such suits, this is one Hail Mary pass that, if it succeeds, could bring respite to a lot of workers by making sure they get what they were promised.
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